Reportedly discussing merger again $48 billion deal would be largest takeover in U.S.

AT&T, GTE

October 08, 1997|By NEW YORK TIMES NEWS SERVICE

NEW YORK -- Seeking a partner to invigorate its torpid local telephone strategy, AT&T Corp. is discussing a merger with GTE Corp., executives close to the talks said yesterday.

A deal to merge the two companies could be worth $48 billion or more and would be the largest corporate takeover in American history, dwarfing WorldCom Inc.'s unsolicited bid of about $30 billion, announced last week, to acquire MCI Communications Corp.

AT&T, the nation's largest long-distance telephone carrier, and GTE, one of the biggest local telephone companies, have been discussing a potential merger intermittently for at least a year, according to analysts and executives familiar with the two companies. But WorldCom's stunning bid for MCI last week increased the pressure on AT&T to find a mate to increase its presence in local markets and on the Internet.

A report on the talks in USA Today yesterday sent shares of GTE up $1.625, to $50.625, in heavy trading on the New York Stock Exchange. AT&T's shares gained $1.50, closing at $47.4375.

The talks, however, are not yet definitive, executives familiar with the companies said, and any announcement about a deal, if one materializes, may not come soon.

In addition to casting about for a partner to help it offer local telephone service, AT&T is looking for at least one executive to fill the jobs of Robert Allen, the company's chairman and chief executive, who plans to step down soon.

AT&T's succession and acquisition strategies have become intertwined, according to analysts. And Charles Lee, GTE's chairman and chief executive, almost surely would not agree to a merger unless he could assume Allen's posts.

AT&T and GTE refused to comment yesterday.

GTE would not be AT&T's first choice for a merger partner. Earlier this year, AT&T was negotiating to merge with SBC Communications Inc., which includes the old Southwestern Bell and Pacific Bell.

Those negotiations, which contributed to the departure of John Walter, AT&T's No. 2 executive, fell apart after Federal Communications Commission Chairman Reed Hundt called such a deal "unthinkable."

Pub Date: 10/08/97

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