Comcast Offers to Acquire AT&T Broadband
Page 1 of 1
Comcast Corp. on Sunday disclosed that it wants to merge with AT&T Broadband in a $44.5 billion deal that the cable company said would create the nation's largest broadband communications provider with approximately 22 million subscribers in eight of the nation's 10 largest markets.
The announcement came on the eve of the completion of AT&T's first leg of its four-point break-up. On Monday, AT&T will officially spin off AT&T Wireless, leaving only Broadband, Business Services and Long Distance and Internet Dial-up as its separate businesses.
However, even though AT&T shareholders would own a majority of the economic and voting interests of the combined company, Comcast officials apparently have been unsuccessful in convincing their AT&T counterparts of the advantages of the strategic combination. After months of negotiations, the frustration felt by Comcast Chairman Ralph Roberts and President Brian Roberts led the Philadelphia-based cable giant to submit their proposal directly to AT&T shareholders.
"It is unfortunate that we were not able to agree on a basis for continuing our dialogue," Comcast officials wrote in a letter addressed to AT&T Chairman and CEO C. Michael Armstrong. "We hope that you will work with us to make this vision a reality."
AT&T hasn't yet commented on the offer; however, the telecommunications company has previously stated that Broadband was not for sale and that it intends to spin off the operations much like it did with AT&T Wireless.
Under its proposal, Comcast would issue 1.0525 billion shares of Comcast stock to acquire AT&T Broadband as well as assume $13.5 billion in debt. Comcast said it is also prepared to acquire AT&T's interests in Time Warner Entertainment, Cablevision, and Rainbow Media by assuming more debt and issuing more equity to reflect their value.
Comcast said its deal is equivalent to $12.60 per AT&T share based on Friday's closing price -- roughly 75 percent of the stock's market value following the spin-off of AT&T Wireless on Monday. Comcast said that AT&T shares would only be worth $16.80 after the Wireless distribution. The stock
closed on Friday at $22.24.