AT&T and BellSouth Merger

In the early 2006, AT&T and BellSouth announced an agreement for merger. The merger took 67 billion dollar to complete. In this paper we will discuss about the merger between these two companies in detail.

AT&T Inc., one of the biggest telecommunications holding company in the world, and BellSouth, largest wireless voice and data provider in the United States of America, announced their merger in March 2006. The new company promised to provide more effective video,wireless, voice, data and broadband service. According to some business experts, this merger would result in world’s largest telecommunication company. Aims:

The combination of these two giants of the communication market will accelerate the the business of integrated wireless service.
The consumers will be benefited from the merger. It will promote market competition as well.
The merger will help AT&T to increase the earnings per share and free cash flow within 2008.
Within 2008, AT&T’s share repurchase amount will reach up to 400 million.
The stockholders of both the companies will be benefited from the merger. The annual run rate in synergies will also be expected to increase.

Terms & Conditions:
According to the agreement signed between the boards of directors of AT&T and BellSouth, the latter’s shareholder would receive 1.325% of AT&T’s common stock for every common share of AT&T and Bellsouth.
On the basis of AT&T’s closing stock price on 3.3.2006, that exchange ratio equaled to 37.09 dollar for each common share.
The amount of the above mentioned exchange ratios equaled 17.9% premium over the closing stock price, as on 3rd March 2006, of BellSouth. The total amount of equity consideration was nearly 67 billion dollars.
The merger was subject to approval by the regulatory authorities as well as by the shareholders of AT&T and BellSouth.
The merger was expected to complete within twelve months from the date of announcement.


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Last Updated on : 29th July 2013


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