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SBC to acquire AT&T
Posted on 31-Jan-2005 19:48 | Filed under: News



Under terms of the agreement, approved by the boards of directors of both companies, shareholders of AT&T will receive total consideration currently valued at $19.71 per share, or approximately US$16 billion in total.

AT&T shareholders will receive 0.77942 shares of SBC common stock for each common share of AT&T. Based on SBC's closing stock price on Jan. 28, 2005, this exchange ratio equals US$18.41 per share. In addition, at the time of closing, AT&T will pay its shareholders a special dividend of US$1.30 per share.

The acquisition, which is subject to approval by AT&T's shareholders and regulatory authorities, and other customary closing conditions, is expected to close by the first half of 2006.

The transaction combines AT&T's global systems, business and government customers, and IP (Internet protocol )-based business with SBC's local exchange, broadband and wireless solutions.

In a press statement, the companies said both SBC and AT&T have highly complementary assets and capabilities. SBC has broad and transferable strengths in local service, with 52 million access lines and dense local access network capabilities to deliver voice and data services to consumers and businesses of all sizes.

SBC also works in the high-speed broadband area, with 5.1 million DSL Internet lines and a local broadband network covering 77 percent of its local customer locations. In addition, SBC has wireless coverage through its 60 percent ownership of Cingular Wireless, which has 49 million subscribers across the country.

AT&T has a global network that spans more than 50 countries and connects virtually every country and territory around the world. AT&T has 26 advanced Internet Data Centers, 13 in the United States and 13 in other countries worldwide.

In addition the transaction includes , AT&T Labs, which has more than 5,600 patents, issued or pending, worldwide.

SBC says it has taken a conservative approach modeling expected AT&T revenues. AT&T's revenues have declined over recent years as it has transitioned from a voice long distance business to an emphasis on business and data markets, and those declines are expected to continue. At the same time, AT&T's next-generation IP and e-services revenues grew 11 percent in 2004.

SBC expects the acquisition will slow its revenue growth rate in the near term following closing. New revenue opportunities include expanded wireless sales in the enterprise space and taking AT&T's industry-leading portfolio of enterprise IP-based services down market to small business and residential customers.

AT&T currently has approximately $6 billion in net debt and SBC has $26 billion, excluding debt at Cingular Wireless. SBC expects free cash flow after dividends from the combined companies to provide the flexibility to continue to reduce combined debt levels over the next five years while providing excellent cash returns to stockholders.





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