today announced that it has completed its acquisition of BBN
, which has become a wholly owned subsidiary of GTE, in a deal
worth roughly $616 million.
The acquisition was finalized at a meeting today of BBN
stockholders, who approved the merger of a GTE subsidiary
with BBN. At the time of the meeting, GTE owned about 94 percent of the
voting power of the outstanding BBN stock. Each BBN share not owned by GTE
was converted into the right to receive $29 in cash.
The deal, which ended rumors of a merger between BBN and
AT&T, is expected to help GTE diversify
its core business as a local telephone company by adding a new online
dimension. It may also be a blow to AT&T, the world's largest
The acquisition of BBN is part of GTE's strategy to become a
national provider of voice, video, and data services. BBN is now part of
GTE Internetworking, the business unit responsible for implementing
GTE's data strategy.
George Conrades, CEO and president of BBN, was named corporate executive
vice president and president of GTE Internetworking on July 9.
Although GTE had previously said its growth rate is expected to reach more
than 10 percent in the "foreseeable future," the acquisition is expected to
result in flat to slightly positive earnings growth in 1997, moderate
growth in 1998, and growth in 1999 of more than 30 to 50 percent.
AT&T held a minority stake in BBN, as well as a close business relationship
with the ISP. Cambridge, Massachusetts-based BBN acknowledged that an AT&T
acquisition had been discussed but said the talks were canceled. The two companies have entered dispute resolution procedures to resolve "material disagreements regarding the terms of the contract," BBN said in a statement.
The merger announcement in May came on the same day that BBN posted a net
$12.2 million, or 58 cents per share, for the third quarter ending March
31. For the March 1996 quarter, it reported revenues of
$60.8 million. BBN attributed the revenue growth to the performance
of BBN Planet and its interactive services division.