Cingular Nabs AT&T Wireless for $41 Billion
By Carlo Longino, Tue Feb 17 14:00:00 GMT 2004
Cingular has won the bidding war for AT&T Wireless, its all-cash offer beating out Vodafone and creating the biggest US carrier.
The AT&T and Cingular people were up late last night, signing the deal around 2 a.m. New York time, and confirming it publicly 3 hours later. Cingular's offer, up $11 billion from its initial bid, values AT&T at $15 a share, a 26% premium over its Friday closing price and roughly double what the shares were worth back in December, when serious takeover speculation began to mount.
While we've talked about why this deal made more sense for Cingular because of the cost reductions it's saying it can squeeze out of the combined company, investors in its parents, SBC and BellSouth, will take a hard look at the purchase price and wonder if they've overpaid. Vodafone shares, in fact, leapt up in London trading after news broke they'd pulled out of the running. SBC's earnings won't see any benefit until 2007, BellSouth's until 2008.
Other challenges remain as well, not the least of which integrating the two companies' national networks and staffs, though many AT&T employees can expect Cingular to ditch them like they'll do the AT&T Wireless name. It also looks like NTT DoCoMo will cash out their AT&T stake and make haste back across the Pacific, taking their US 3G plans with them.