another interesting article....read the one in BOLD...
AT&T makes surprise bid for
MediaOne
By John Borland and Corey Grice
Staff Writers, CNET News.com
April 22, 1999, 4:00 p.m. PT
update Long distance giant AT&T today made a surprise
bid for cable company MediaOne, hoping to disrupt last
month's merger agreement between MediaOne and
Comcast.
AT&T offered to pay approximately $62 billion in cash, stock,
and assumed debt for the Denver-based cable company,
exceeding Comcast's previous bid at current share values,
according to the long distance giant.
Comcast's original bid for MediaOne in March was close to $60
billion. But the company's stock has fallen since that time,
decreasing the value of its offer.
Less than one year after being spun off from local phone giant
US West, MediaOne has found itself in the middle of a
high-profile bidding war that underscores today's value of cable
operators and their broadband networks.
"Americans have been waiting for someone to run another wire
to their homes to give them a choice in local phone service and
deliver the advanced services they expect in a competitive
market," said AT&T chairman C. Michael Armstrong in a
statement announcing the bid.
"Our earlier acquisition of Tele-Communications Incorporated
and now our proposal for MediaOne Group should leave no
doubt that we are serious about doing just that," Armstrong
said.
The bid includes $4.5 billion in assumed debt and preferred
equity, according to AT&T.
The offer was made in a letter sent to MediaOne executives
today. AT&T said it had worked to develop the bid with Amos
B. Hostetter, the former CEO of US West Media Group, which
was once MediaOne's parent.
Wall Street, media executives, and others in the Internet
industry have quickly recognized the potential of cable to carry
voice and data in addition to traditional video programming,
making cable companies such as MediaOne ground zero in
the so-called the convergence game.
Do you want to know more?
Read related news
View story in The Big Picture
Go to Message Boards
Search News.com
AT&T's bid would include more than $30 in cash and 0.95
shares of AT&T stock for every MediaOne share. Based on
AT&T's closing price today, the cash and stock offer has a
value of $87.375 per MediaOne share, according to AT&T.
MediaOne, which had already accepted its cable peer's buyout
offer last month, would say little about the offer. "The proposal
is currently under review," said MediaOne spokesman Dave
Wood. "We have nothing to add at this time."
Comcast's proposal gave MediaOne the right to entertain--but
not solicit--other offers during a 45-day window, set to expire
May 6. If it accepts another proposal, MediaOne would be
requried to pay Comcast a $1.5 billion fee.
"Now we have two on the table," Wood said.
If MediaOne executives agree to the deal, AT&T would vault far
ahead of its nearest competitor, Time Warner cable, as the
largest cable company in the nation.
Its acquisition of TCI, completed in late March, gave it nearly
11 million subscribers. The addition of MediaOne's base of five
million customers would bring it close to 16 million
subscribers.
Phones, cable, and high-speed Net
AT&T is on a drive to provide local telephone service to as
many households as possible, ideally though cable TV lines.
Its TCI acquisition, along with a deal with Time Warner cable,
will give AT&T close to 40 percent national coverage. But
Armstrong has said his goal is close to 65 percent coverage.
To reach this, the company will have to be able to cover
subscribers from Comcast, MediaOne, and Cox
Communications, the third, fourth and fifth-largest U.S. cable
companies.
Striking a deal with MediaOne would bring AT&T
significantly closer to this goal, and potentially eliminate
one additional obstacle. MediaOne is one of the largest
shareholders in Time Warner cable, and must approve
the cable telephony deal between AT&T and Time
Warner.
The acquisition also would give it a strong new hold on
the high-speed cable Net market.
Already the biggest and controlling partner of the
@Home Network, also through its purchase of TCI,
AT&T would pick up close to 50 percent of Road
Runner, the other large cable Internet service.
This would likely add fuel to arguments by AOL and
consumer groups that the cable networks should be
opened to all ISPs--much as ordinary phone lines are
today--lest companies like AT&T be given a monopoly
over cable Internet service.
MediaOne is primarily located in the Northeast,
including Massachussetts and New Hampshire. The
company, the nation's third-largest cable operator, also
has significant holdings in Atlanta, Detroit, Los Angeles,
as well as Florida and central California.
news.com |
