Cingular Wins Battle for AT&T Wireless
The merger will create the largest American wireless company, replacing current U.S. market leader Verizon.
The deal between the United States’ second and third largest cell phone companies was worth $15 per share, and, according to merger and acquisition research firm Dealogic, was the largest all-cash offer in history.
Vodafone nearly clinched the deal with an offer of $14 per share, until Cingular offered its final bid — 37 percent higher than its initial offer made last month.
Had cellular titan Vodafone successfully acquired AT&T Wireless, it would have been required to sell its 45 percent stake in Verizon Wireless.
In Europe, investors appeared relieved that Vodafone’s bid had failed. The British company’s shares had lost about 9 percent over the last three weeks, over concerns of an expensive takeover battle.
“The markets think it’s a good thing that Vodafone hasn’t overpaid, although in the long-term of course it does leave them with a strategic problem in the United States,” Patrik Schowitz, global equity strategist at banking group HSBC, told Reuters.
In a press release posted on the company Web site, Vodafone said it “remains committed to its existing position in the U.S. market with its successful partnership in Verizon Wireless.”
Despite European concerns that the pricetag for AT&T Wireless was too high, Cingular officials said they were comfortable with their final offer — one the firm put on the table just after 2 a.m. Tuesday morning.
“We think that the price we paid is a fair price. Yes, AT&T Wireless has some issues … but we think the company was sound before those problems and we view the problems as being temporary in nature,” Cingular Chief Operating Officer Ralph De La Vega told Reuters.
The merger will give the company a total of 46 million customers, as well as annual revenues of more than $32 billion. The combined company will retain the Cingular name. Billing and other functions will be merged once the deal is approved, but according to De La Vega, there will be no immediate impact on customers.
Cingular chief executive Stan Sigman is slated to run the merged company, while AT&T Wireless Chairman John Zeglis has said he will leave when the deal closes.
“I’ll hang around anytime Stan wants me to and then I’m onto the next thing,” Zeglis said.
AT&T Wireless shares surged 13 percent in midday trading on the New York Stock Exchange Tuesday, where it was the most actively traded stock. Shares of Cingular’s parent companies, SBC Communications Inc. and BellSouth Corp., both dropped.