AT&T on Sunday agreed to acquire BellSouth Corp. for about $67 billion, to expand its reach into the southeastern United States and acquire the rest of Cingular Wireless it does not already own. The companies issued a press release outlining what they see as the main benefits of merging:
- Natural combination of two leading wireline providers and joint owners of Cingular speeds progress in integrated wireless/wireline services
- Substantial financial benefits for stockholders of both companies; an expected net present value of $18 billion in synergies resulting from a more than $2 billion annual run rate in synergies expected in 2008, growing to $3 billion in 2010
- Expect merger to be accretive to AT&T adjusted earnings per share in 2008, double-digit adjusted EPS growth in each of next three years (earnings adjusted for merger integration costs and amortization of intangibles) and significant growth in free cash flow after dividends in 2007 and 2008
- AT&T's board authorizes share repurchase of 400 million shares by end of 2008; buy back of at least $10 billion in shares over next 22 months planned, with the majority in 2007
- Merger will benefit customers and promote competition
According to the release, 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.