A huge deal in the cable industry:
Monday March 22, 3:04 am Eastern Time
Company Press Release
SOURCE: Comcast Corporation and
MediaOne Group, Inc.
Comcast and MediaOne
Announce $60 Billion
Merger
MediaOne Shareholders to Receive 1.1 Comcast Class A
Special Common Shares Per MediaOne Share
Creates Leading Broadband Communications Company
PHILADELPHIA and ENGLEWOOD, Colo., March 22 /PRNewswire/ --
Comcast Corporation (Nasdaq: CMCSK - news, CMCSA - news) and
MediaOne Group, Inc. (NYSE: UMG - news) announced today that the two
companies have entered into a merger agreement that combines the third and
fourth largest domestic cable providers to create the world's leading
broadband communications provider. The combined Comcast/MediaOne
will, on a pro forma basis, serve 11 million cable customers with systems that
pass over 18 million homes domestically. On a pro forma basis, the
combined company would have generated over $8 billion in 1998 revenues,
EBITDA of approximately $2.4 billion and will be well positioned to take
advantage of the growing and dynamic broadband communications industry.
The merger agreement calls for each MediaOne shareholder to receive 1.1
shares of Comcast Class A Special Common Stock (CMCSK) for each
MediaOne share it owns, or $80.16 per share based on Comcast's closing
stock price of $72.875 on Friday, March 19th. The stock-based
consideration represents a premium of approximately 32% to MediaOne's
closing price of $60.75. Upon completion of the merger, MediaOne
shareholders will own approximately 64% of the equity of the combined
company. The merger will be accounted for as a purchase by Comcast and
will be tax-free to MediaOne shareholders. The boards of directors of both
companies have unanimously approved the transaction.
Mr. Brian L. Roberts, President of Comcast, said, ''This is a breathtaking
moment in the history of Comcast. The combination of MediaOne and
Comcast will form a company with the most attractive assets in the industry,
a powerful balance sheet and an unmatched management team. The new
company will have the size and scope to lead the evolving broadband
environment. Our cable properties are geographically complementary and
should provide the opportunity for meaningful revenue enhancement and
operating synergies promptly after closing.''
Mr. Charles M. Lillis, President, Chief Executive Officer and Chairman of
MediaOne, commented, ''This transaction creates a company with a unique
combination of high growth domestic and international broadband,
programming and telephony businesses. Together, we will be optimally
positioned to develop and provide nationally branded broadband services
across our principal business lines of video, voice and data. Customers will
benefit from a broader and bundled service offering, while shareholders and
employees will have the opportunity to participate in the growth of the
combined entity.''
The combined company will:
-- have a capitalization of almost $97 billion (market value of equity
plus debt and preferred as of March 19, 1999)
-- have the best clustered and one of the largest broadband networks in
the U.S. with 8 clusters, each with greater than 500,000 subscribers
-- pass over 18 percent of U.S. households with its existing cable
infrastructure
-- serve over 11 million domestic cable customers
-- hold valuable global telecommunications, programming and Internet
interests
-- be strong financially, with little net debt
The management team for the new company will be drawn from the
leadership teams of both MediaOne and Comcast. Ralph J. Roberts will
remain Chairman of the combined company and Brian Roberts will remain
President. Chuck Lillis will serve as a Vice Chairman of Comcast and join
the Comcast Board of Directors along with three additional MediaOne
designees, bringing the total number of directors to 14.
The merger agreement is subject to the approvals of MediaOne and Comcast
shareholders as well as approvals from federal and local regulatory
authorities. The companies anticipate that the merger will close by
approximately year-end.
While the merger agreement prohibits MediaOne from soliciting competing
acquisition proposals, it has 45 days to accept a superior proposal, subject to
payment of a fee of $1.5 billion to Comcast.
Salomon Smith Barney acted as financial advisor and provided a fairness
opinion to Comcast and Lehman Brothers Inc. acted as financial advisor and
provided a fairness opinion to MediaOne. Comcast is being represented by
Davis Polk & Wardwell and MediaOne is being represented by Weil Gotshal
& Manges and Cadwalader Wickersham & Taft.
Comcast Corporation (http://www.comcast.com) is principally engaged in the
development, management and operation of broadband cable networks and
in the provision of content through principal ownership of QVC,
Comcast-Spectacor and Comcast SportsNet, a controlling interest in E!
Entertainment Television and through other programming investments.
Comcast's Class A Special and Class A Common Stock are traded on The
Nasdaq Stock Market under the symbols CMCSK and CMCSA,
respectively.
MediaOne Group (http://www.mediaonegroup.com) is one of the world's
largest broadband communications companies, bringing the power of
broadband and the Internet to subscribers in the United States, Europe and
Asia. The company also has interests in some of the fastest-growing wireless
communications businesses outside the U.S. For 1998, the businesses that
comprise MediaOne Group produced $7.1 billion in proportionate revenue.
This press release contains forward-looking statements made pursuant to the
''safe harbor'' provisions of the Private Securities Litigation Reform Act of
1995. You are cautioned that such forward-looking statements involve risks
and uncertainties which could significantly affect expected results in the
future from those expressed in any such forward looking statements made
by, or on behalf of the Company. Certain factors that could cause actual
results to differ materially include, without limitation, the effects of legislative
and regulatory changes; the potential for increased competition; technological
changes; the need to generate substantial growth in the subscriber base by
successfully launching, marketing and providing services in identified
markets; pricing pressures which could affect demand for the Company's
services; the Company's ability to expand its distribution; changes in labor,
programming, equipment and capital costs; availability of debt and equity
financing; the Company's continued ability to create or acquire programming
and products that customers will find attractive; future acquisitions, strategic
partnerships and divestitures; general business and economic conditions; and
other risks detailed from time to time in the Company's periodic reports filed
with the Securities and Exchange Commission.
SOURCE: Comcast Corporation and MediaOne Group, Inc. |
