NEWS! "AT&T Group to Take Stake in Net2Phone" and "Yahoo! Taking Net2phone Stake "
siliconinvestor.com
AT&T Group to Take Stake in Net2Phone
Mar 31 9:15am ET
NEW YORK (Reuters) - A consortium led by top U.S. long-distance telephone company AT&T Corp. on Friday said it would make a $1.4 billion cash investment in Internet telephone services provider Net2Phone Inc.
The move is the latest by AT&T to strengthen its Internet presence. Earlier this week the telecommunications giant unveiled two other major agreements aimed at bolstering its position on the Internet and set the terms for a $10 billion initial public offering of its wireless operations.
The AT&T-led group, which also includes AT&T's cable television programming unit Liberty Media Group and British Telecommunications Plc, said it would buy 4 million newly issued class A shares from Net2Phone at $75 per share.
The group also will buy 14.9 million class A shares from Net2Phone's controlling shareholder IDT Corp., also for $75 per share.
When the transactions are complete, the group will hold a 32 percent stake in Net2Phone but will control 39 percent of the voting stock, the group said. Each class A share gets two votes, while each common share gets just one.
IDT has given the consortium, which will be 51 percent owned by AT&T, the right of first refusal to buy IDT's remaining holding of 10 million class A Net2Phone shares. If the right is exercised, the group would have a controlling voting interest of 59 percent in Net2Phone, and an overall economic stake of 48 percent.
AT&T said it would pay $725 million for its controlling stake in the consortium; the other partners will purchase the remaining partnership interest.
AT&T said the deal will slightly lower its earnings per share for the next few years but will be neutral to earnings per share on a cash basis.
``Net2Phone has established itself as the Internet's very own phone company,' AT&T Chairman and Chief Executive C. Michael Armstrong said in a statement. ``It handles two out of every five calls routed over the Internet, and its award-winning communications and voice mail services are featured on the Web's leading portals.
``Together with Net2Phone, we will develop a new generation of voice-enhanced Web-based communications services. Our goal is to make telephones, Web pages and fax machines extensions of each other.'
IDT Chairman and Chief Executive Howard Jonas said, ``AT&T's adoption of the Net2Phone technology, along with our growing relationships with AOL (America Online Inc.) and other major players in the Internet and telephony industries, provide a solid base from which we can create a standard in IP telephony which will allow the industry to move into the broadband future.'
Earlier this week AT&T struck a deal to strengthen its grip on Internet access and information provider ExciteAtHome Corp., and announced a pact with British Telecom and Microsoft Corp. that lays the groundwork for a future push into wireless Internet services.
In pre-market trading on the Instinet electronic broker system, Net2Phone shares were sharply higher, up 9-1/2 at 64-7/8 from a Thursday close on Nasdaq at 55-3/8.
IDT was up 4-3/4 at 42 from its Thursday close of 37-1/4.
AT&T was not active.
In addition to leading the long-distance phone industry, AT&T is the No. 2 U.S. cable television company and will become No. 1 when it completes its purchase of MediaOne Group.
siliconinvestor.com
Yahoo! Taking Net2phone Stake
Mar 31 10:17am ET
NEW YORK (Reuters) - A consortium led by top U.S. long-distance telephone company AT&T Corp. (T.N) on Friday said it would make a $1.4 billion cash investment in Internet telephone services provider Net2Phone Inc. (NTOP.O).
The deal is the latest in a series of AT&T moves to strengthen its Internet presence. Earlier this week the telecommunications giant unveiled two other major agreements aimed at bolstering its position on the Internet and set the terms for a $10 billion initial public offering of its wireless operations.
Separately, Net2Phone said it had sold a minority stake to Internet search engine and media powerhouse Yahoo! Inc. (YHOO.O) through a stock swap valued at $150 million.
The AT&T group, which includes AT&T's cable television programming unit Liberty Media Group (LMGa.N) and British Telecommunications Plc (BT.L), said it would buy 4 million newly issued class A shares from Net2Phone at $75 per share.
The group also will buy 14.9 million class A shares from Net2Phone's controlling shareholder IDT Corp. (IDTC.O), also for $75 per share.
When the transactions are complete, the group will hold a 32 percent stake in Net2Phone and will control 39 percent of the company's voting stock, the group said. Each class A share gets two votes, while each common share gets one.
IDT has given the consortium, which will be 51 percent owned by AT&T, the right of first refusal to buy IDT's remaining holding of 10 million class A Net2Phone shares. If the right is exercised, the group would have a controlling voting interest of 59 percent in Net2Phone, and an overall economic stake of 48 percent.
AT&T said it would pay $725 million for its controlling stake in the consortium; the other partners will purchase the remaining partnership interest.
AT&T said the Net2Phone deal will slightly lower its earnings per share for the next few years but will be neutral to earnings per share on a cash basis.
In the Yahoo! deal, Net2Phone exchanged 2.8 million shares of its common stock for 806,000 shares of Yahoo!, giving Yahoo! a stake of more than 5 percent.
Officials from the companies were not immediately available to say whether Yahoo! was part of the AT&T consortium.
The Yahoo! agreement is Net2Phone's latest link with a major Internet player as it moves to expand the reach of its voice-over-the-Web telephone service. It also has a partnership with top Internet services provider America Online Inc. (AOL.N).
In early Nasdaq trading on Friday, Net2Phone shares rose 6-5/8, or about 12 percent, to 62, and IDT shares climbed 3-3/4, or about 10 percent, to 41. On the New York Stock Exchange, AT&T was down 3/8 at 57-6/16.
``Net2Phone has established itself as the Internet's very own phone company,' AT&T Chairman and Chief Executive C. Michael Armstrong said in a statement. ``It handles two out of every five calls routed over the Internet, and its award-winning communications and voice mail services are featured on the Web's leading portals.
``Together with Net2Phone, we will develop a new generation of voice-enhanced Web-based communications services. Our goal is to make telephones, Web pages and fax machines extensions of each other.'
IDT Chairman and Chief Executive Howard Jonas said, ``AT&T's adoption of the Net2Phone technology, along with our growing relationships with AOL and other major players in the Internet and telephony industries, provide a solid base from which we can create a standard in IP telephony which will allow the industry to move into the broadband future.'
Earlier this week AT&T struck a deal to strengthen its grip on Internet access and information provider ExciteAtHome Corp. (ATHM.O), and announced a pact with British Telecom and Microsoft Corp. (MSFT.O) that lays the groundwork for a future push into wireless Internet services.
In addition to leading the long-distance phone industry, AT&T is the No. 2 U.S. cable television company and will become No. 1 when it completes its purchase of MediaOne Group (UMG.N).
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