Reply #40: SBC Agrees to Buy AT&T for $16 Billion in Stock

[54anickel]

http://www.bloomberg.com/apps/news?pid=10000103&sid=a.M...

Jan. 31 (Bloomberg) -- SBC Communications Inc., the second- biggest U.S. telephone company, agreed to buy AT&T Corp. for about $16 billion in stock and cash, marking the end of the 130-year-old company that brought phones into American homes.

AT&T investors will receive SBC stock worth $18.41 a share and a special dividend of $1.30 a share, the companies said today in a Business Wire statement. The total of $19.71 a share matches AT&T's Jan. 28 closing price. SBC Chief Executive Officer Edward Whitacre, 63, will be CEO of the combined entity.

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AT&T's market value, which peaked at about $180 billion in 1999, has fallen to about $15.7 billion, as revenue plunged and it sold wireless and cable-television businesses. SBC's market capitalization has grown to $80 billion.

Other Targets

SBC's agreement to buy AT&T may make MCI Inc., AT&T's top rival, a target of another local-phone company such as Verizon Communications Inc., said Jeffrey Kagan, an independent telecommunications analyst in Atlanta. The deal comes amid an increase in telecommunications mergers, including Sprint Corp.'s purchase of Nextel Communications Inc. and Cingular Wireless LLC's acquisition of AT&T Wireless Services Inc.

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Regulatory Hurdles

Approval of the transaction by the Justice Department, Federal Communications Commission and state regulators may take as many as 20 months and require the sale of assets such as AT&T's consumer long-distance business, said Blair Levin, a Washington- based analyst at Legg Mason Wood Walker Inc. and former chief of staff of the FCC.

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