Telecommunications giant AT&T said today it has completed its
$44 billion merger with cable operator MediaOne Group, creating the
country's largest cable operator.
The companies said all regulatory approvals for the deal have been obtained.
The FCC approved the merger last
week. The boards of the two companies approved the deal in May of last
The deal is valued around $44 billion, based on AT&T's closing
stock price yesterday of $33.50. As previously announced, MediaOne
shareholders will receive $30.85 in cash plus 0.95 shares of AT&T stock for
every share of MediaOne they hold on the closing date. Based on AT&T's recent
stock price, MediaOne shareholders will receive an additional cash
payment of $5.42 per MediaOne share.
AT&T plans to issue 606 million shares of common stock and $23 billion in
cash to close the transaction. After the merger is complete, there will be
approximately 3.7 billion AT&T shares outstanding, and the company expects to
have about 5 million AT&T shareholders.
The combined company will become the country's largest cable operator, with
about 16 million customers. AT&T said MediaOne will become part of AT&T
Broadband, based in the Denver area. MediaOne's services eventually will be
renamed under the AT&T brand, the company said.
As reported, the FCC's approval came with significant requirements that will
force AT&T to comply with federal cable-ownership limits, which the company
would have exceeded. Cable operators are forbidden from controlling, either
directly or via joint ventures, more than 30 percent of the market, and
although the FCC tweaked those regulations last year, AT&T would have
controlled nearly 42 percent of the market.
The FCC gave AT&T three options for attaining compliance, including selling
its stake in Liberty Media, the company's cable TV programming unit, or
selling MediaOne's 25 percent stake in Time Warner Entertainment.