Cingular submits offer to buy AT&T Wireless
By Andrew Backover
USA Today
Cingular Wireless has made a formal offer to acquire AT&T Wireless in an all-cash deal that would create the No. 1 cell-phone carrier in the country, according to executives with knowledge of the offer at two companies involved in the deal.
The offer was submitted to AT&T Wireless' board of directors during the weekend, the executives say. A previously scheduled board meeting began yesterday and is expected to continue today.
It is not known what AT&T Wireless' response will be or whether it has received other offers in a potential bidding war.
Cingular, the No. 2 U.S. cell-phone company, is jointly owned by local phone companies BellSouth (40 percent) and SBC Communications (60 percent). Cingular is not publicly traded.
AT&T Wireless, the No. 3 U.S. carrier, declined comment. Cingular also declined comment, as did BellSouth and SBC.
A blockbuster merger has long been predicted in the crowded U.S. cell-phone market, where six national carriers compete fiercely. Competition has intensified after a recent federal rule that lets customers keep their numbers when switching carriers.
The first deal could spur others. As the field of competitors narrows, everything from the prices of phones and services to the quality of service could be affected.
Cingular's offer price is not known, but it includes a premium over AT&T Wireless' closing share price of $9.99 on Friday, the executives say. The stock market was closed yesterday.
The Friday stock price gave AT&T Wireless a market value of $27 billion. The stock soared more than 20 percent last week, largely on speculation a deal was near.
While the deal would be all cash, BellSouth and SBC are expected to tap the debt market to raise part of the money, the executives say.
Last week, it was reported that Cingular's on-and-off talks with AT&T had intensified and that a deal, while not assured, could be announced within weeks. Also last week, Reuters and The Wall Street Journal reported that other wireless carriers were interested in a deal with AT&T, including: No. 5 Nextel Communications; No. 6 T-Mobile, owned by Germany's Deutsche Telekom; Britain's Vodafone, which owns 45 percent of No. 1 U.S. carrier Verizon Wireless; and Japan's NTT DoCoMo, which owns a 16 percent stake in AT&T Wireless.
A Cingular-AT&T Wireless merger would create a giant with more than 45 million subscribers. That would surpass Verizon Wireless' more than 36 million.
