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SBC Seals Prodigy Deal

SBC Communications Inc. Thursday sealed a deal to acquire the remaining 70.5 million shares of Prodigy Communications Corp. it does not already own.

The Regional Bell Operating Company (RBOC) will pay $6.60 a share, a total of about $465.3 million, for the Class A common stock shares. SBC originally bid $5.45 a share ($348 million) for the company on Oct. 2. But a number of Prodigy shareholders raised objections, saying the unsolicited bid was too low. Prodigy shares were trading at about $6.20 at the time.

SBC came back to the table with the Independent Directors Committee that the Prodigy board appointed to negotiate on its behalf, and indicated that it might revise its bid to as much as $6.25 a share ($40.6 million).

It apparently elected to go even higher while in talks with the committee. Prodigy stockholders must still vote to approve the transaction, and the SBC board said it will advise stockholders to accept the offer. SBC already owns a 42 percent stake in the company. Telmex and Carso Global Telecom, together, own 59.3 percent of Prodigy's Class A common stock, 34 percent of the total voting equity in the company. Both Telmex and Carso Global Telecom confirmed that they will accept SBC's offer.

SBC said it will amend its tender offer on Friday to reflect the increased offer price and to extend the offer for 10 business days following the date of the amendment. SBC said it expects the transaction to close in the fourth quarter.