SBC Communications to Buy AT&T Corporation for 0.46 Times Revenue
The Deal: SBC Communications has agreed to acquire AT&T Corporation for approximately $16 billion in cash and stock. Based on recent closing prices, SBC is expected to pay $15 billion in stock and $1 billion in cash to acquire AT&T. SBC’s chairman and chief executive, Edward E. Whitacre, Jr., will continue to perform these duties for the combined company, while David W. Dorman, AT&T’s current chief executive, will become president of SBC. The transaction still requires regulatory approval, and regulators may require company divestitures.
Discussion: AT&T Corporation provides long-distance telephone services to more than 30 million customers. The company’s global communications network is one of the largest and most advanced in the world. AT&T also offers advanced data communications services to business customers.
SBC Communications provides both wireline and wireless telephone services. The company has has 52 million access lines in 13 states. SBC also provides DSL broadband services to more than 5 million subscribers.
The acquisition of AT&T will make SBC Communications the nation’s largest communications company. The deal will make SBC the biggest long-distance carrier and the largest provider of phone and data services to the US corporate market. The acquisition of AT&T’s revenue will help offset the decline in SBC’s residential phone business, which has been hurt by competition with cellphone and Internet phone services.
Copyright NVST, Inc. Feb 7, 2005
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