SBC, AT&T to Merge in $16 Billion Deal

As expected, board members have signed off on a deal in which SBC Communications will acquire AT&T for approximately $16 billion in stock. The transaction was approved late Sunday night following meetings between directors of both companies.

If given regulatory approval, the merger is expected to close in the first half of 2006. The deal will create the largest telephone company in the United States, vaulting SBC over current market leader Verizon.

By purchasing AT&T, SBC will also gain a foothold in the corporate market, along with the largest international fiber optic network.

"This deal is the next logical step in the evolution of these two companies," said David Dorman, chairman and chief executive of AT&T, in a conference call with investors.

Dorman will become president of the new company, while SBC chairman and CEO Edward Whitacre Jr. retains his roles. "Today's agreement is a huge step forward in our efforts to build a company that will lead an American communications revolution in the 21st century," Whitacre said in a statement announcing the deal.

While an acquisition by SBC means the end of an era for AT&T, which at one point held a monopoly on the telephone market, the AT&T brand will live on in the new company, officials said.

"We value the heritage and strength of the AT&T brand, which is one of the most widely recognized and respected names throughout the world, and it will certainly be a part of the new company's future," said Whitacre.