AT&T to Buy BellSouth for $67 Billion

AT&T on Sunday confirmed it plans to acquire BellSouth in a deal valued at close to $67 billion. The newly merged company would become the largest telecommunications service in the United States, surpassing Verizon and giving AT&T full control over Cingular, the largest wireless operator.

Under terms of the deal BellSouth shareholders will receive 1.325 shares of AT&T common stock for each common share of BellSouth. This exchange ratio equals $37.09 per BellSouth share -- a 17.9% premium. AT&T chairman and CEO Edward Whitacre will retain his position and serve as CEO of the new company.

The Wall Street Journal first reported on the merger late Saturday night, prompting the companies to issue an official statement.

The original AT&T was acquired by SBC Communications last year in a deal valued at $16 billion. SBC then changed its name to AT&T in November and kicked off a marketing blitz to breathe life back into the aging, but well recognized, brand.

AT&T says the purchase of BellSouth would result in cost savings of approximately $2 billion. The growth of Cingular Wireless and competition from cable operators are said to be two of the primary reasons behind the merger talks.

"This merger is a logical next step that creates substantial value for customers and stockholders of both AT&T and BellSouth," said Whitacre. "It will benefit customers through new services and expanded service capabilities. It will strengthen Cingular through unified ownership and a single brand."

Still, such a deal will require U.S. government approval and it's not clear how many obstacles will arise. Verizon faced a harsh backlash following its proposed purchase of MCI last year, but the deal was eventually approved with few restrictions.

AT&T and BellSouth executives are hopeful that regional separations will aid the process, as the two companies do not directly compete.

"Our focus is on providing great service and innovative, competitively priced products for consumers and businesses throughout the Southeast, the nation and the world," added Whitacre. "Together, we will lead the way into a new era of converged and bundled communications, video and entertainment services while also improving our ability to manage complex networks."

"Technology changes and convergence are shaping a new competitive dynamic and creating tremendous opportunity," said BellSouth CEO Duane Ackerman. "We're creating a company with much better capabilities to seize these opportunities while maintaining its strong focus on customer service and community involvement. This was the right time for this merger."

26 Responses to AT&T to Buy BellSouth for $67 Billion

© 1998-2024 BetaNews, Inc. All Rights Reserved. Privacy Policy - Cookie Policy.