Subsequently, AirTouch accepted Vodafone Group's bid of close to $56 billion, ending a bidding war for the San Francisco-based mobile phone giant. (See related story)
The Baby Bell had entered into talks with the San Francisco-based AirTouch at the end of last year, reportedly offering a stock swap worth approximately $45 billion for the company.
But the U.K.-based Vodafone Group, that country's biggest wireless phone company, responded several days later with a counter offer, reportedly nearing $55 billion.
Many analysts had said Bell Atlantic would be the best marriage partner for AirTouch. The Baby Bell is trying to build a nationwide wireless network, and the addition of AirTouch's service area would allow it to reach all but a few states in the United States. The two companies also share a joint investment in PrimeCo PCS, another smaller wireless communications company.
By withdrawing from the bidding war, Bell Atlantic left a clear field for the British company, which now vaults to the position of world's largest mobile phone company with the acquisition of AirTouch's near-17 million subscribers.
A Bell Atlantic spokesperson declined to comment on the reasons for withdrawing from the merger discussions.
The news comes just a day after Bell Atlantic won approval from the Securities and Exchange Commission to treat the accounting for the proposed merger as a so-called pooling of interests. That had cleared the way for the reported higher bid, allowing it to compete with Vodafone's offer.
In an interview with Bloomberg published today, the president of Bell Atlantic's telecommunications unit had said the company still wanted AirTouch.
"We want to pay exactly the right price, a fair price to AirTouch, a fair price to shareholders, and beat Vodafone by $2," said James Cullen.
The Vodafone deal would give the merged company investments in a wireless network that stretched across Europe, as well as valuable properties in Asia and the United States.
The British company wooed AirTouch once before, nearly 18 months ago, but those talks closed without reaching any deal.
But Vodafone's stock has nearly tripled in the last year alone, allowing it much more flexibility to acquire a company the size of AirTouch.
AirTouch has solidified its position as the largest independent wireless company in the world, with 7.8 million U.S. mobile customers, 4.9 million international subscribers, and 3.3 million paging customers in the third quarter last year.
AirTouch's international markets, which grew 88 percent from the third quarter of 1997 to the third quarter of 1999, are particularly attractive to the British company. It has shown only lukewarm interest in entering the U.S. market, however, and some financial analysts have speculated that any deal could involve spinning off AirTouch's U.S. operations to a third company.
Not all analysts are convinced that AirTouch needs to be sold now, moreover.
"I'm not sure there's a dying need with AirTouch to find a buyer," said IDC wireless analyst Ian Gillot last week. The company is easily big enough to survive on its own, and has proven to be a successful independent player, he added.
Shares of AirTouch closed up 4.5625 to 83.375, just under the stock's 52-week high of 83.5 on the New York Stock Exchange.
Bell Atlantic fell 0.6875 to 53.125 on the NYSE, despite gains throughout the broader market and the rest of the telecommunications sector. Vodafone's American Depositary Receipts gained 1.4375 to 176.