Capping months of bidding wars, AT&T Corp. Wednesday announced it will merge its cable television and broadband unit with Comcast Corp., to create a cable giant serving nearly 22 million customers.
The merger, which will result in the creation of a new company called AT&T Comcast Corp., values AT&T's cable and broadband unit, AT&T Broadband, at about US$72 billion, AT&T said in a statement. The boards of directors of both companies approved the merger Wednesday; AT&T's board voted unanimously in favor of the deal.
The deal is expected to close at the end of 2002 and is subject to regulatory approval and votes by shareholders of both companies.
Under the terms of the deal, AT&T shareholders will receive stock in the new company, getting about 0.34 shares of AT&T Comcast stock for each share of AT&T (New York Stock Exchange: T) that they own. In addition to the AT&T Comcast shares they receive, shareholders will continue to own their existing AT&T shares. Comcast shareholders will receive one share of AT&T Comcast stock in exchange for each share of Comcast (Nasdaq: CMCSA) they own, AT&T said. AT&T shareholders will control 56 percent of the new company and about 66 percent of the voting interests. The Roberts family, which owns Comcast, will control one-third of the new company's voting interests, according to the statement.
Microsoft Corp, which owns $5 billion in AT&T securities, has agreed to convert those into 115 million AT&T Comcast shares.
C. Michael Armstrong, chairman and chief executive officer of AT&T, has agreed to serve as chairman of the new company when the merger closes, instead of retiring from AT&T in May 2003 as he had planned, the company said. Brian Roberts, president of Comcast, will be named chief executive officer of the new company.
Assets controlled by the newly merged company will include the cable TV systems of both companies, AT&T's 25.5 percent stake in Time Warner Entertainment, and Comcast's interests in several major entertainment properties, AT&T said.
AOL Time Warner Inc., Cox Communications Inc. and Comcast have been jockeying to merge with AT&T Broadband, upping their offers last week at the request of AT&T, according to a report earlier this week in the New York Times. AT&T Broadband business first became a merger target in July.
Responding to the merger announcement Wednesday, Cox issued a statement expressing disappointment at the news and adding, "Cox is confident that its bid was fair, and was made in the best interests of all Cox and AT&T stakeholders."