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SBC, AT&T concur on acquisition

Deal details * SBC Communications has about 50 million local phone customers * AT&T has 30 million long-distance customers * Both companies' boards have approved the purchase, but it is still subject to regulatory approval * AT&T shareholders are to receive 0.77942 shares of SBC for each AT&T share, or about US$15 billion in stock * AT&T will pay shareholders a special US$1.30 per share dividend when the deal is closed

SBC Communications Inc has agreed to acquire AT&T Corp in a US$16 billion deal that would create the US' largest communications company, the companies said early yesterday.

The decision followed late-night meetings by directors of SBC, the US' second-biggest regional phone company, and the 120-year-old icon AT&T, whose roots stretch back to 1875, with founder Alexander Graham Bell's invention of the telephone.

"It's a done deal," SBC spokesman Larry Solomon said. "We just agreed to acquire AT&T."

He said documents in the acquisition were signed early yesterday after SBC's board of directors approved the deal. Board members of AT&T approved the transaction on Sunday evening.

The acquisition is still subject to regulatory and shareholder approvals. The acquisition is expected to close by the first half of next year.

San Antonio-based SBC has about 50 million local-telephone customers, mostly in the Midwest and South.

AT&T, once known as Ma Bell, handled the nation's telephone calls before it was broken apart 21 years ago. The Bedminster, New Jersey-based company has nearly 30 million long-distance customers.

"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," SBC chairman and chief executive Edward Whitacre Jr said in a statement.

"We are combining AT&T's national and global networks and expertise with SBC's strong platforms and skills in local exchange service, wireless and broadband," he added. "It's a great combination."

AT&T shareholders, under terms of the agreement, will receive total consideration currently valued at US$19.71 per share, or about US$16 billion. From SBC, AT&T shareholders will receive 0.77942 shares of the Texas company's common stock for each AT&T common share, in an exchange ratio equaling US$18.41 per share based on SBC's closing stock price last Friday. That amounts to about US$15 billion in stock, Solomon said.

Additionally, AT&T will pay its shareholders a special dividend of US$1.30 per share at the time of closing, totaling about US$1 billion. The stock consideration in the transaction was expected to be tax-free to AT&T shareholders.

"The combination of these two strong, complementary companies will ensure that together we will have all the capabilities necessary to compete successfully in serving a broad range of customers across the country and around the globe," AT&T chairman and chief executive David Dorman said in a statement.

"Together, SBC and AT&T will be a stronger US-based global competitor capable of delivering the advanced network technologies necessary to offer integrated, high-quality and competitively priced communications services to meet the evolving needs of customers worldwide," Dorman said.
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