AT&T, BellSouth to Merge in $67 billion Deal

AT&T Inc. and BellSouth Corporation announced yesterday an agreement to merge the two companies, a combination that will create a more effective and efficient provider in the wireless, broadband, video, voice and data markets.

The merger will streamline the ownership and operations of Cingular Wireless, which is jointly owned by AT&T and BellSouth. The new company will be more innovative, nimble and efficient, providing benefits to customers by combining the Cingular, BellSouth and AT&T networks into a single fully integrated wireless and wireline Internet Protocol network offering a full range of advanced solutions.

As a result, the combined company will be better able to speed the convergence of new and improved services for consumers and businesses, and embrace the industry’s shift to Internet Protocol network-based technologies.

Under terms of the agreement, approved by the boards of directors of both companies, shareholders of BellSouth will receive 1.325 shares of AT&T common stock for each common share of BellSouth. Based on AT&T’s closing stock price on March 3, 2006, this exchange ratio equals $37.09 per BellSouth common share. This represents a 17.9 percent premium over BellSouth’s closing stock price on March 3, 2006, and a total equity consideration currently valued at approximately $67 billion.

The merger, which is subject to approval by shareholders of both companies, as well as regulatory authorities and to other customary closing conditions, is expected to close within approximately 12 months.

“This merger is a logical next step that creates substantial value for customers and stockholders of both AT&T and BellSouth,” said AT&T Chairman and CEO Edward E. Whitacre Jr. “It will benefit customers through new services and expanded service capabilities. It will strengthen Cingular through unified ownership and a single brand. And we are confident that this is a merger we can execute, based on our track record with previous integrations and our experience working closely with BellSouth to create and build Cingular Wireless, and operate Yellowpages.com.

“This transaction combines two solid, very well-run companies,” Whitacre added. “BellSouth operates in an attractive region with a growing economy. It has great employees and an outstanding network, with fiber optics deeply deployed in its service area. It has a strong record in terms of customer service and a sound, conservative balance sheet. These strengths, added to those of AT&T, will improve our ability to provide innovative services to more customers while returning substantial value to our owners and improving our growth profile.”

“Technology changes and convergence are shaping a new competitive dynamic and creating tremendous opportunity,” said Duane Ackerman, chairman and CEO of BellSouth. “We’re creating a company with much better capabilities to seize these opportunities while maintaining its strong focus on customer service and community involvement.

“This was the right time for this merger,” said Ackerman. “This combination is good for our employees, our customers and our stockholders.”

AT&T has committed to continue BellSouth’s historic levels of charitable contributions and community activities, including the continued funding of charitable activities and economic development and education initiatives throughout BellSouth’s nine?state area.

“Our focus is on providing great service and innovative, competitively priced products for consumers and businesses throughout the Southeast, the nation and the world,” said Whitacre. “Together, we will lead the way into a new era of converged and bundled communications, video and entertainment services while also improving our ability to manage complex networks.”