SBC in $4.4B merger with SNET
SBC Communications Inc. announced today it will acquire Southern New England Telecommunications Corp. in a deal worth about $4.4 billion.
The transaction gives SBC access to SNET's local and wireless business in Connecticut as well as its wireless market in Rhode Island and western Massachusetts. When the deal is completed, SBC will serve more than 34.7 million access lines and have access to more than 92.6 million potential wireless customers.
"This merger reflects the confidence we have in the growth prospects of our companies' wireless and wireline businesses," said SBC CEO Edward Whitacre in a release.
The deal, which calls for SNET shareholders to receive 0.8784 of a share of SBC stock for each share of SNET stock they hold, must be approved by the Federal Communications Commission and the Connecticut Department of Public Utilities Control. It will also require a filing with the U.S. Department of Justice. The deal is expected to be completed by the end of this year. SNET headquarters will remain in New Haven, Conn.
SBC, of San Antonio, sparked a merger mania among the Baby Bells when it announced a deal to acquire Pacific Telesis Group for $16.7 billion in 1996.
The deal was the first in a series of mergers in the telecommunications industry last year, following the passage of 1996 legislation that opened local and long-distance markets to competition. Since then, Bell Atlantic Corp. has bought out Nynex Corp., and British Telecommunications plc announced it would buy MCI Communications Corp., although that deal was put on hold after WorldCom Inc. announced a competitive takeover bid.
In a conference call this morning, Whitacre said the deal did not occur too soon after the PacTel merger.
"Acquisitions are difficult, but I think we've done very well with Pacific. It's not premature," he said.
Whitacre added that there are no management changes planned at SNET, and that the deal will not alter SNET's plans for the long-distance market.
SNET, which is not bound by the same regulations as the Baby Bells, has been relatively successful in its long-distance offerings for Connecticut customers.
Analysts are predicting even greater change in the telecommunications arena after a federal judge in Texas ruled last week that another federal law, restricting local phone companies' access to the long-distance market, was unconstitutional.