Date: Fri 09-Jan-1998

Publication: Bee

Author: CURT

Quick Words:

business-SNET-SBC-merger

Full Text:

SBC COMMUNICATIONS TO AQUIRE OLDEST LOCAL PHONE CO. IN U.S.

BY BRIGITTE GREENBERG

ASSOCIATED PRESS

NEW HAVEN -- Texas-based telecommunications giant SBC Communications, Inc,

announced this week that it will acquire Southern New England

Telecommunications Corporation, the country's oldest local phone company, in a

stock swap worth $4.4 billion.

The deal will merge a wholly owned subsidiary of SBC into Southern New England

Telecommunications, Connecticut's largest phone service provider.

SBC is a combination of Pacific Telesis and the company formerly known as

Southwestern Bell. It serves customers in seven states including Texas and

California.

The transaction will give SBC a foothold in a market now dominated by Bell

Atlantic, whose local phone territory stretches from Maine to Virginia but

does not include Connecticut, the domain of SNET.

Daniel J. Miglio, SNET's chairman and chief executive, said the dominance of

giant companies forced tiny SNET to look for outside help.

"We have been beginning to feel the pains of being relatively small and

realized that with all the players in the industry continuing to get much

bigger that it might be wise for us to try to hook up with a quality larger

company to ensure our success over the long term," Miglio said.

SNET's headquarters will remain in New Haven, and the company will continue to

operate under the SNET moniker.

SNET employs about 9,700 people in Connecticut. Edward E. Whitacre, Jr, SBC's

chief executive, said no layoffs are anticipated and no immediate changes in

the management structure are planned.

"This is not about downsizing from SBC's standpoint. We would like everyone to

stay. We want to grow this business," Whitacre said. "From what I've seen,

it's an excellent employee group. It's a top management team, and it's

complementary to SBC, so this is about growth. This is not about reduction."

Founded in 1898, SNET has 2.26 million access lines and 1.5 million business

and residential customers and a growing cellular phone service with access to

a potential five million customers. Earnings last year were $192.8 million, on

revenues of $1.9 billion.

"We've worked hard to bring advanced telecommunications products and services

to the people of Connecticut for more than a century, and we're thrilled to

become part of a company which shares our values and commitment to our

customers, employees, share owners and communities," Miglio said.

SBC Communications, Inc, based in San Antonio, has more than 32 million access

lines and more than five million wireless customers across the United States,

as well as investments in telecommunications businesses in 10 countries.

SBC operates under various brand names around the country _ Southwestern Bell,

Pacific Bell, Nevada Bell and Cellular One. SBC provides local and

long-distance telephone service, wireless communications, paging, Internet

access, and messaging, as well as telecommunications equipment, and directory

advertising and publishing.

SBC has more than 116,000 employees and reported 1996 revenues of $23.5

billion.

Under the acquisition, holders of SNET common stock at the effective time of

the merger would receive roughly .88 of a share of SBC common stock for each

share of SNET common stock in a tax-free exchange. For example, an SNET share

owner holding 1,000 shares of stock would receive about 878 shares of SBC

stock.

Based on SBC's closing stock price on Jan. 2, of nearly $74.94 per share, the

deal represents a value of about $65.83 for each SNET share. That would mean a

33 percent premium to SNET's closing price on Jan. 2 of $49.63 per share.

In early trading today on the New York Stock Exchange, SNET shares were

trading up 20.6 percent, or $10.18 3/4, to $59.81 1/4. SBC shares were down

2.9 percent, or $2.18 3/4 to $72.75.

The deal will combine companies with complementary wireless businesses and

strong local telephone operations. Miglio and Whitacre said negotiations began

about two or three months ago.

SBC provides wireless service in the Northeast markets of Boston, upstate New

York and the Washington, D.C., Baltimore area.

"This merger reflects the confidence we have in the growth prospects of our

companies' wireless and wireline businesses. Our combination will be good for

the customers, share owners and employees of both companies," Whitacre said.

The companies hope to complete the deal by year's end. It is subject to

various regulatory approvals and will require a filing with the U.S. Justice

Department.

Upon completion of the merger, SBC will serve more than 34.7 million access

lines in high-growth areas and have access to more than 92.6 million potential

wireless customers across the country.