SBC Communications, Inc. yesterday said it plans to merge with Southern New England Telecommunications Corp. in a stock deal valued at $4.4 billion.
The plan was immediately attacked by long-distance service provider AT&T.
Southern New England Telecommunications (SNET) provides wireless and fixed network long distance, Internet and data communications services in Connecticut, and wireless service in Rhode Island and western Massachusetts.
SBC said SNET will benefit from its financial resources and wireless and marketing expertise, while SBC will benefit from SNET's experience in providing long-distance services.
The transaction, which is subject to regulatory approvals and approval by SNET's shareholders, calls for a merger of a wholly owned subsidiary of SBC into SNET. Under the plan, shareholders of SNET common stock will receive 0.8784 of a share of SBC common stock for each share of SNET common stock in a tax-free exchange.
Based on SBC's closing stock price on Jan. 2, 1998 of $74.9375 per share, this represents a value of approximately $65.83 for each SNET share. The transaction, expected to be finalized by year-end, will be accounted for as a pooling of interests, SBC said.
Long-distance phone service provider AT&T immediately criticized the planned merger.
"As we've said before, we do not believe mergers between telephone companies should be approved unless they give the customers of both companies more choices in service providers," said Mark Rosenblum, vice president of law and public policy at AT&T in a statement. "So before any merger like this is approved, both companies should be required to open their local markets to competition."
The move comes just days after a U.S. federal judge ruled in a lawsuit filed by SBC in July last year that part of the landmark 1996 Telecommunications Reform Act is unconstitutional, since it bars the regional Bell operating companies, such as SBC, from offering long-distance telephone services.
