February 17, 2004, 8:48 AM — Cingular Wireless LLC said Tuesday it has agreed to buy AT&T Wireless Services Inc. for around US$41 billion, or $15 per share.
The deal, which still requires standard approval from AT&T Wireless shareholders and federal regulatory authorities, would create the largest company in the U.S. wireless market, with 46 million customers, Cingular said. The deal is expected to become finalized by the end of the year, Cingular added.
The combined company will operate under Cingular's brand and be based in Cingular's Atlanta headquarters, Cingular President and Chief Executive Officer (CEO) Stan Sigman said during a conference call with press. AT&T Wireless Chairman and CEO John Zeglis said he will leave the company after a transition period, once the deal has closed.
The deal was signed in New York around 2 a.m. after a weekend of bidding and counter-bidding between Cingular and Vodafone Group PLC. Zeglis declined to name other bidders that participated in the auction process.
Vodafone Group PLC, Europe's largest mobile phone company, said it withdrew from the bidding after it "concluded that it was no longer in its shareholder's best interests to continue discussions." The company, based in Newbury, England, said it remains committed to its current partnership in Verizon Wireless Inc., the dominant operator in the U.S. wireless market.
Vodafone owns a 45 percent share of Verizon Wireless in a partnership that is now four years old. Verizon Communications Inc. owns a controlling interest in the mobile phone company.
"It really is a fairly simple story from our side today. In pursuing AT&T Wireless, we were attempting to see if we could create more shareholder value than we currently have with Verizon," said a Vodafone spokesman who declined to be named.
"This was not a question of price, since a company the size of Vodafone has access to funding. We had laid down a benchmark in terms of price early on. Beyond that benchmark, there was no point in proceeding as no value was created for shareholders," he said.
The purchase of AT&T Wireless by Cingular will consolidate the U.S. wireless market from six major companies down to five. The other four companies in the market are Nextel Communications Inc., T-Mobile USA Inc., Sprint Corp. and Verizon.
Cingular is currently the second-largest wireless company in the U.S. with 24 million subscribers. The operator is jointly owned by SBC Communications Inc. of San Antonio, which owns 60 percent, and BellSouth Corp. of Atlanta, according to the company's Web site.