Buyout would form telephone goliath SBC and Ameritech join in $60 billion deal

Telecommunications

May 11, 1998|By NEW YORK TIMES NEWS SERVICE

SBC Communications Inc., the West's dominant local telephone company, is expected to announce today that it is acquiring the Ameritech Corp. for about $60 billion in stock, people close to the talks said. The deal would re-create much of the old Bell system.

The proposed deal is the latest in a string of corporate blockbusters. In size, it is the second-largest in corporate history, exceeding the BankAmerica-Nationsbank merger announced last month, and trailing only the $70 billion deal in March between Citicorp and the Travelers Group.

And it far exceeds the biggest previous telecommunications deal, Worldcom Inc.'s proposed $37 billion acquisition of the MCI Communications Corp., which was announced in October.

By acquiring Ameritech, SBC would become the biggest local phone company in the United States by far, exceeding the current leader, the Bell Atlantic Corp.

Last year, the company, based in San Antonio, acquired the Pacific Telesis Group, another of the Baby Bells and the dominant phone company in California and Nevada, in a $16.7 billion deal. And in January, it announced that it would acquire the Southern New England Telecommunications Corp.

With its second purchase of a regional Bell telephone company since February 1996, when the federal government deregulated the $200 billion telecommunications industry, SBC is in effect reassembling the AT&T goliath that the government disbanded in the 1980s. If completed, the deal would leave just four of the Bell companies out of the original seven.

The people close to the talks said SBC would pay more than a 25 percent premium over Ameritech's closing stock price of $43.875 on Friday. Each share of Ameritech would be exchanged for 1.316 shares of SBC.

A person close to the talks said the boards of both companies voted yesterday afternoon to approve the combination. It is believed that the companies have been in discussions for four to five weeks.

The combined company is expected to take Ameritech's name.

SBC Communications' chairman, Edward Whitacre Jr., is expected to lead the combined company.

Pub Date: 5/11/98

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