AT&T reaches deal to buy BellSouth for $67 billion

<p>AT&T Inc. said Sunday it will acquire smaller rival BellSouth Corp. for $67 billion in stock, in a deal that goes a long way toward resurrecting the old Ma Bell telephone system.</p><p>The deal would substantially expand the reach of AT&T, already the country's largest telecommunications company by the number of customers served.</p><p>AT&T will pay 1.325 of its own shares for each BellSouth share. Based of Friday's closing price of $27.99 for AT&T shares, that works out to be $37.09 for each BellSouth share, an 18 percent premium from the Friday closing price of $31.46 for the Atlanta-based company.</p><p>AT&T was formed by San Antonio-based SBC's acquisition of AT&T Corp. in November. The deal added a substantial national reach to the former Southwestern Bell's local business, which is concentrated in 13 states, including Texas, California, and the Midwest.</p><p>BellSouth is the dominant local telephone provider in nine Southeastern states.</p><p>The merged company would have 70 million local-line phone customers and nearly 10 million broadband subscribers.</p><p>AT&T expects the acquisition to save it $2 billion annually, starting the year after the deal closes. About half of the savings would come from combining the work forces and from reducing advertising expenses.</p><p>The rest of the savings would come from combining the backbone network and information-technology operations of the two companies.</p><p>In wireless, AT&T and BellSouth are already partners, jointly owning the nation's largest carrier, Cingular Wireless LLC. That business has grown strongly since it was formed in 2001 by the merger of a number of regional wireless carriers, and there has been speculation that AT&T wanted to assume full control of this growth business.</p><p>BellSouth's price for its Cingular stake may have been an outright sale of the whole company.</p><p>Under the deal, the Cingular brand will be phased out in favor of the AT&T brand. The name will be familiar to wireless customers: AT&T Wireless Inc., a spin-off of AT&T, was acquired by Cingular in October 2004.</p><p>Together, the companies employ more than 253,000 people, which does not include Cingular's work force.</p><p>___</p><p>On the Net:</p><p>HASH(0x1cd8300)</p><p>HASH(0x1d03364)</p>

http://accesswdun.com/article/2006/3/128877