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NEW YORK (CNN/Money) - Comcast Corp. won the battle for AT&T Corp.'s cable-television business on Wednesday and will pay $72 billion in stock and debt, in a transaction that ends a five month stalemate.
Terms of the deal call for AT&T to spin off the broadband business and merge it with Comcast to form AT&T Comcast Corp. AT&T shareholders will receive 0.34 a share of the combined AT&T Comcast, while Comcast shareholders will receive one share of the new company. Comcast will assume about $20 billion in debt.
The board of New York-based AT&T (T: up $0.15 to $16.80, Research, Estimates) unanimously approved the deal, which values the AT&T broadband unit at about $13.07 a share, the companies said in a statement. The combined company will have about 22 million subscribers and about $19 billion in revenue.
AT&T shareholders will own about 56 percent of the combined company and about 66 percent of the voting interests. The Roberts family will control one-third of the voting interest. AT&T Comcast will consist of both companies' cable systems as well as AT&T's 25.5 percent interest in Time Warner Entertainment, the companies said in a joint release.
Comcast president Brian Roberts will serve as CEO of the new company. AT&T CEO Michael Armstrong, who was expected to retire in May 2003, will serve as chairman of the new company when the merger closes at the end of 2002.
AT&T Comcast Corp. will be headquartered in Philadelphia and maintain offices in New York City.
AT&T's decision to choose Comcast Corp. is an about-face for the nation's largest long-distance phone provider. In July, AT&T rejected Comcast's $44.5 billion unsolicited bid and then shopped the broadband unit to various suitors.
Many had doubted that Comcast would win its fight for the broadband unit after the cable company aggressively criticized AT&T's management. Comcast beat out bids from Cox Communications and AOL Time Warner, parent of CNN/Money.
"AT&T Broadband and Comcast can accomplish more together than we could alone," AT&T CEO Armstrong said in a statement.
"I look forward to working with Mike and the AT&T Broadband team to achieve the full potential of this tremendous new company, " Comcast President Robert said.
In its initial offer in July, the voting structure proposed by Comcast troubled AT&T. AT&T would have received majority share ownership, while Comcast would have near 45 percent voting control.
AT&T over the summer pushed aside plans for an IPO of the broadband unit when Comcast made its unsolicited bid. AT&T now plans to proceed with other aspects of its restructuring, and plans to create a tracking stock of its consumer services unit., which is expected to be fully distributed to shareholders once it is approved mid-2002.
Should be interesting to see how the stocks react tomorrow...
------ “The most beautiful thing we can experience in life is the mysterious. It is the source of all true art and science. He to whom this emotion is a stranger, who can no longer pause to wonder and stand rapt in awe, is as good as dead: for his eyes are closed.” - Albert Einstein
Originally posted by damaged True statement but I'm not really worried about the stocks...just my employment!
Who do you work for? I'm an online tech for Comcast...don't see my job going anywhere anytime soon....
------ “The most beautiful thing we can experience in life is the mysterious. It is the source of all true art and science. He to whom this emotion is a stranger, who can no longer pause to wonder and stand rapt in awe, is as good as dead: for his eyes are closed.” - Albert Einstein
I work for AT&T in the Corporate offices as well as an internal support engineer. The way things look, most corporate employees are looking at 9-12 months of employment at least before they close us up and kick us out. Let's hope that doesn't change.
