The deal announced Monday (Jan. 31) has been approved by the boards of both companies. Under terms of the deal, AT&T shareholders will receive stock worth $18.41 a share and a special dividend of $1.30 a share. This means SBC is paying AT&T shareholders a combination of just under $15 billion in stock and just over $1 billion in cash.

Edward Whitacre will remain as chairman and chief executive of the new company. David Dorman, AT&T's chief executive, will become president of the combined group, and will join its board along with two other AT&T executives.

Whiteacre said: "Today's agreement is a huge step forward in our efforts to build a company that will lead an American communications revolution in the 21st century.

"We are combining AT&T's national and global networks expertise with SBC's strong platforms and skills in local exchange service, wireless and broadband."

SBC said it expected the deal would yield $15 billion in synergies, net of the cost to achieve them.

The takeover marks the latest chapter in the reshaping of the U.S. telecom industry. Last year Cingular Wireless, a joint venture between SBC and BellSouth, agreed to buy AT&T Wireless for $41 billion. In December, Nextel and Sprint agreed to merge in a $36 billion deal.

The transaction is expected to close in the first half of 2006 but will still require regulatory approval. Indications are that Michael Powell, outgoing chairman of Federal Communications Commission, will not raise significant obstacles, but the process may be a long one, particularly at the state level.

As recently as seven years ago, then-FCC chairman Reed Hundt branded the prospects of such a deal "unthinkable." Since then, however, the industry has undergone rapid change, with traditional telephone companies now competing with wireless and cable companies.

The companies will argue strongly that this intensification of competition justifies such a merger.

By: DocMemory
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