Under the reported terms of the deal, AirTouch chief executive Sam Ginn would become chairman of the new Vodafone Group, while the company's current CEO Chris Gent would keep his post.
AirTouch shareholders will receive 5 shares of Vodafone stock plus $9 in cash for each share of AirTouch common stock they hold, for a value of approximately $97 per share.
The merged company, with a combined market capitalization of about $110 billion, will be the largest independent wireless company in the world. It will be the third largest publicly traded company in the United Kingdom.
"Vodafone-AirTouch will have the size and financial resources to take advantage of future opportunities, making the company a leading force not only within wireless, but throughout the telecommunications industry," said Ginn in a prepared statement.
Bell Atlantic started the bidding war with an offer of close to $45 billion shortly before the end of the year. Analysts said that deal made good sense, as it would have allowed Bell Atlantic to create a nationwide mobile phone network to compete with AT&T and Sprint.
But early this month, the British company responded with its own bid of close to $55 billion.
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.
The merger is subject to regulatory and shareholder approval, and is expected to close in the second half of 1999.
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 on Friday.
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.