ALL'S WELL THAT ENDS WELL?
AT&T stock slump may spur new MediaOne deal
By Bloomberg News
Special to CNET News.com
August 11, 1999, 5:50 p.m. PT
URL: news.com
AT&T's shares fell to an eight-month low, raising the possibility that the largest U.S. phone company will have to increase what it agreed to pay for No. 4 cable-television company MediaOne Group.
In April, AT&T said it would pay $85 a share for MediaOne, or $62.5 billion in cash and stock, based on AT&T per-share price of $57. If AT&T shares fell to $51.30 each, AT&T said it would pay more cash to maintain the $85 price.
AT&T's fell 0.5 to 48.4375 in trading today, after earlier dropping to 48.375. That is the lowest since December 17, and shares are down about 25 percent since hitting a record high on February 3. MediaOne fell 0.75 to 67.0625.
Englewood, Colorado-based MediaOne doesn't have the option to renegotiate the agreement, and AT&T says it isn't required to boost the stock and cash offer. Some analysts said they don't expect the drop AT&T's share price to jeopardize the purchase.
"I don't know of any particularly great alternatives for MediaOne shareholders right now," said Anna-Maria Kovacs, an analyst at Janney Montgomery Scott. "The stock could be way up again."
The acquisition, which will make AT&T the largest U.S. cable TV company, is expected to close in the first quarter 2000.
"We believe MediaOne deal is secure and stock price fluctuation is a point-and-time issue," said Eileen Connolly, a spokeswoman at AT&T. "We're confidant investors will recognize the vision of AT&T strategy and the stock price will represent that."
MediaOne shareholders are expected to vote on the sale in around October.
At $85 per share, MediaOne holders are getting a premium of about 26 percent premium over today's price.
Copyright 1999, Bloomberg L.P. All Rights Reserved
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