Sunday, March 20, 2011

AT&T to buy T-Mobile USA for $39 billion in Biggest Merger since Financial Crisis

AT&T Inc said on Sunday it would buy Deutsche Telekom AG's T-Mobile USA, in a $39 billion cash-and-stock transaction that would create a new industry behemoth by combining two of the four largest U.S. wireless carriers with 95 million customers ahead of Verizon with 94.1 million.
The purchase price includes a cash payment of $25 billion with the balance to be paid using AT&T common stock. AT&T has the right to increase the cash portion of the purchase price by up to $4.2 billion.
As part of the deal, Deutsche Telekom will get about 8 percent stake in AT&T, and a Deutsche Telekom representative will join the AT&T board. AT&T can increase the cash component so long as Deutsche Telekom receives at least a 5 percent equity stake in it.
The agreement has been approved by the boards of both companies.
AT&T said it would finance the cash portion with new debt and cash on AT&T's balance sheet. AT&T has an 18-month commitment for a one-year unsecured bridge term facility underwritten by JPMorgan Chase & Co for $20 billion.
AT&T will not assume any debt from T-Mobile USA or Deutsche Telekom.
AT&T said the deal is expected to be accretive to earnings, excluding non-cash amortization and integration costs, in the third year after closing.
The deal is expected to close in about 12 months.

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