SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: April 22, 1999
AT&T CORP.
A New York Commission File I.R.S. Employer
Corporation No. 1-1105 No. 13-4924710
32 Avenue of the Americas, New York, New York 10013-2412
Telephone Number (212) 387-5400
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Form 8-K
AT&T Corp.
April 22, 1999
Item 5. Other Events.
See Exhibit 99 to this Form 8-K.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 99 AT&T Corp. Press Release issued April 22, 1999.
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Form 8-K
AT&T Corp.
April 22, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AT&T CORP.
/s/ Marilyn J. Wasser
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By: Marilyn J. Wasser
Vice President and Secretary
May 3, 1999
AT&T Offers $62 Billion in Cash, Stock and Assumed Debt
and Preferred Equity for MediaOne Group;
AT&T Chairman Calls Offer "Clearly Superior" to Comcast Bid
FOR RELEASE: THURSDAY, APRIL 22, 1999
NEW YORK -- AT&T today announced that it has submitted an offer to
purchase all of MediaOne Group for $87.375 per share in cash and stock for a
total value of $58 billion, based on today's closing price of AT&T's stock of
$59.50, not including $4.5 billion in assumed debt and preferred equity. The
company said it will pay $30.85 in cash plus .95 shares of AT&T stock for every
MediaOne share.
In addition, the cash portion of the AT&T offer will be increased to
offset up to a 10 percent decline from AT&T's closing stock price of $57.00 per
share on April 21, 1999. This will maintain a value of $85.00 for every MediaOne
share if AT&T's stock trades between $57 and $51.30 per share. If AT&T's stock
price increases, MediaOne shareowners will enjoy the full upside appreciation.
AT&T said the stock portion of the offer will be tax-free to MediaOne
shareowners.
In a letter to MediaOne Chairman and CEO Charles M. Lillis, AT&T
Chairman and CEO C. Michael Armstrong said AT&T's offer is clearly a superior
value for MediaOne shareowners in terms of value and growth prospects for the
combined companies.
AT&T's offer represents a premium of 17 percent, or $8.6 billion, over
the current value of Comcast's offer and 26 percent over MediaOne's current
trading price. Unlike Comcast, AT&T is offering cash, as well as stock, and the
cash portion of the offer is structured to protect MediaOne shareowners against
some fluctuation in AT&T's stock price. In addition, the shares AT&T is offering
have full voting rights and pay a cash dividend, while Comcast's shares issued
in the proposed merger do not.
"This acquisition is not only an investment in AT&T's future," said
Armstrong. "It's also an investment in the future of a competitive
communications market in the U.S.
"Combining AT&T and MediaOne means that far more American consumers
will have a choice in local phone service," he added. "Together, AT&T and
MediaOne will bring broadband video, voice and data services to more
communities, more quickly than we could separately or, in MediaOne's case, with
any other company.
"Ever since the Telecommunications Act of 1996 was passed, Americans
have been waiting for someone to run another wire to their homes to give them a
choice in local phone service and deliver the advanced services they expect in a
competitive market," Armstrong said. "Our earlier acquisition of
Tele-Communications, Inc. and now our proposal for MediaOne Group should leave
no doubt that we are serious about doing just that."
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AT&T intends to divest over a period of time certain non-strategic
MediaOne assets currently valued at approximately $18 to $20 billion. The
company also has plans to continue its aggressive efforts to reduce overall AT&T
operating expenses by an additional $2 billion by the end of the 2000. The
majority of the expense reductions will be in network costs, SG&A expenses,
lower access fees paid to local exchange companies for handling long distance
calls and more streamlined operations and systems. Additional savings in the
range of at least $175 to 200 million will result from synergies in combining
the former TCI and MediaOne cable operations.
AT&T plans to issue 626 million additional shares in the transaction.
The company expects dilution to earnings per share of approximately 30 cents in
the first full year of combined operation, resulting from additional shares
outstanding and the cost of financing, partially offset by expense reductions
and synergies. Following the purchase of MediaOne, cash earnings, which is net
income per share plus acquisition goodwill, will decline by less than 10 cents
per share. In addition, the acquisition over time will accelerate earnings, cash
flow and revenue growth. It also will reduce the percentage of AT&T's revenues
that come from slower growth businesses such as consumer long distance.
AT&T said it is confident in its ability to complete the acquisition by
the end of 1999, which is at least as quickly as the proposed Comcast merger.
Because AT&T believes the transaction will advance the public interest by
increasing competition, the company does not expect to encounter significant
legal obstacles. AT&T also said it anticipates no difficulty in arranging
financing for the cash portion of its offer and expects to have $30 billion of
financing in place by April 30. Chase Manhattan Bank and Goldman Sachs Credit
Partners L.P. already have each committed to provide $5 billion of the
financing.
With the acquisition of MediaOne, AT&T's owned and operated cable
systems will pass approximately 26.5 million households, giving AT&T a
significant presence in 18 of the top 20 markets. The addition of MediaOne's
cable systems will expand AT&T's national coverage in key markets such as
Boston, Atlanta, Richmond and Los Angeles.
In addition, AT&T will hold minority interests in a number of cable
systems, including those owned by Time Warner Entertainment. AT&T will not be
the operator of these systems. The company said that following its acquisition
of MediaOne, it looks forward to strengthening its existing relationship with
Time Warner in a way that accelerates the ability of the companies to deliver
cable telephony and data services.
AT&T plans to combine MediaOne's Denver-based headquarters with AT&T's
Denver-headquartered Broadband & Internet Services business unit. Both groups
will report to Leo J. Hindery, Jr., president and chief executive officer of the
company's Broadband & Internet Services unit.
The company said Amos B. Hostetter participated in the development of
AT&T's offer for MediaOne. Hostetter is former chairman and CEO of Continental
Cablevision, and former CEO of U.S. West Media Group, the two predecessors of
MediaOne. Upon completion of the transaction, Hostetter will become
non-executive chairman of AT&T's Broadband & Internet Services unit,
complementing the leadership of Hindery. Following completion, Hostetter also
will join AT&T's Board of Directors. In addition, AT&T will invite a current
MediaOne board member to join the AT&T board.
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AT&T's advisors on the transaction are Goldman, Sachs & Co. and
Wachtell, Lipton, Rosen & Katz.
The foregoing are "forward looking statements" which are based on management's
beliefs as well as on a number of assumptions concerning future events made by
and information currently available to management. Readers are cautioned not to
put undue reliance on such forward looking statements, which are not a guarantee
of performance and are subject to a number of uncertainties and other factors,
many of which are outside AT&T's control, that could cause actual results to
differ materially from such statements. For a more detailed description of the
factors that could cause such a difference, please see AT&T's filings with the
Securities and Exchange Commission. AT&T disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
