Sbc, Ameritech To Merge, Swap $61billion Stock
US telecoms operators SBC and Ameritech yesterday said they will merge in a stock swap valued at $61 billion.
This ranks the deal as the second-largest corporate merger ever. SBC would emerge as the biggest local phone monopoly in America, with annual revenue of more than $40 billion and over 57 million local lines in 13 US states.
The merger would value Ameritech stock at 15 per cent above its closing share price on Friday of $43.875.
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The Wall Street Journal quoted people familiar with merger talks as saying the boards of the two companies met separately to consider the merger over the weekend. The merger would, however, have to pass a review by the Federal Communications Commission and various other authorities, the Journal said.
Traders said the mammoth transaction is expected to generate intense scrutiny from regulators and cries of outrage from competitors, politicians and consumer groups. Theres no doubt this will attract a lot of controversy, said one trader.
The $61 billion stock transaction will reunite three of the seven baby Bells formed by the forced break-up of AT&T in 1984. The Journal said the US local telephone companies appeared to be trying to put back together the old AT&T monopoly they once constituted.
SBC management, led by chairman Edward E Whitacre, would lead the combined company, while Ameritech chief executive Richard Notebaert would relinquish control, enriched with big exit payments.
Notebaert would receive a paycheck equal to at least three times his $1 million annual salary, plus lavish stock holdings.
He and his top four executives could leave with more than $33 million in payments, it said.
American Telephone & Telegraph Co (AT&T) was broken up in 1984 on antitrust grounds with its local networks split into seven bells.
Meanwhile, shares in Ameritech Corp and SBC Communications Corp rose in pre-opening trade yesterday. Ameritech was up at 50 from a Friday closing price of 43-14/16, dealers said. SBC was up at 46 in light trade from a close of 42-6/16.