In its bid to have full control of Cingular Wireless, AT&T has announced that it will acquire BellSouth for $67 billion. AT&T already has a 60% stake at Cingular, while BellSouth owns the remaining shares.
After the acquisition, AT&T and BellSouth would have a long-distance telephone and data network that spans both ends of the country. This covers numerous homes in 22 states and corporate clients that make up more than half of Fortune 1000 companies.
Under the deal, stockholders of BellSouth will get
1.325 common shares of AT&T for a similar BellSouth share. This results into a 17.9% premium as the share distribution scheme valued the BellSouth common share at $37.09.
AT&T is also planning to buy back at least $10 billion of its common stocks. This reacquisition will be completed within the next 22 months.
After the sale, AT&T and BellSouth will have an aggregate market capitalization of $165 billion, $66 billion more than rival Verizon Communications. AT&T will be the surviving brand name for all landline and wireless units.
The agreement is still subject to the approval of the Federal Communications Commission and antitrust officials. However, the deal is widely expected to be approved.
Income per share in 2007 is expected to remain the same despite the merger. However, a hike is foreseen after the said year.