Speculation that AT&T<T.N> eyeing AOL-BusinessWeek
NEW YORK, Feb 25 (Reuters) - Speculation that U.S.
communications giant AT&T Corp may be eyeing online services
provider America Online Inc <AOL.N> for a merger has resurfaced
on Wall Street, the March 8 issue of BusinessWeek reports.
"There are rumours on the Street that AOL may well be the
target of the likes of AT&T for a merger of near-equals," the
magazine's closely-watched Inside Wall Street column said.
"But analysts think AOL's huge market capitalisation of
$83.5 billion would deter any potential partner."
Veteran online industry analyst Gary Arlen of Arlen
Communications in Bethesda, Maryland, said he was aware that
the rumours of a potential AT&T-AOL tie-up had resurfaced in
recent days but had no evidence there was anything to the talk.
"They sure are acting like lovers who want to make sure
people don't know they are in love," Arlen said of the two
companies.
Still, he noted that in the current industry environment,
"anything is possible."
The BusinessWeek column did not provide any sources or
further details on the talks. There have been rumours in the
past of such a blockbuster link-up.
But AOL already forged a complicated three-way deal a year
ago with AT&T's archrival MCI WorldCom Inc. <WCOM.O> to acquire
the online service CompuServe, with MCI providing AOL a large
chunk of its Internet access network facilities.
The column downplayed the rumours, saying analysts believe
AOL shares keep climbing because the Dulles, Virginia-based
company has strong fundamentals.
The column said Warburg Dillon Read Internet analyst
Michael Wallace sees AOL's worth at $110 per share at least
while the company's stock on Thursday closed at $87.19 on the
New York Stock Exchange.
AT&T shares last trade
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