UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 29, 1998
U S WEST, Inc.
(Exact name of registrant as specified in its charter)
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A Delaware Corporation Commission File Number IRS Employer Identification No.
(State of incorporation) 1-8611 84-0926774
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7800 East Orchard Road
Englewood, Colorado 80111
(Address of principal executive offices)
(303) 793-6500
(Registrant's telephone number, including area code)
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Item 5. Other Events
U S WEST, Inc. issued a press release in the form attached hereto as
Exhibit 99 regarding a new definitive agreement to merge the United States
cellular and PCS interests of U S WEST Media Group into AirTouch Communications.
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Item 7. Exhibits
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Exhibit Description
99 Press Release issued January 29, 1998 entitled "AirTouch and U S WEST Media Group Announce
New $5.7 Billion Plan to Merge U.S. Wireless Interests."
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SIGNATURE
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 hereunto duly authorized.
U S WEST, Inc.
/s/ STEPHEN E. BRILZ
By:______________________________
Stephen E. Brilz
Assistant Secretary
Dated January 29, 1998
EXHIBIT 99
January 29, 1998
AirTouch U S WEST Media Group
Kathy Reinhart, 415-658-2042 Cathy Fowler, 303-793-6509
Susan Rosenberg, 415-658-2209 Steve Lang, 303-793-6290
AirTouch and U S WEST Media Group Announce New $5.7 Billion
Plan to Merge U.S. Wireless Interests
AirTouch Expands Wireless Footprint and Increases U.S. Cellular
Customer Base 50 Percent; U S WEST Media Group to Focus Resources on Core
Broadband Strategy While Reducing Debt by About $1.4 Billion
AirTouch Communications Inc. (NYSE:ATI) and U S WEST Media Group
(NYSE:UMG) today announced a new definitive agreement to merge the U.S. cellular
and PCS interests of U S WEST Media Group into AirTouch. U S WEST Media Group's
international wireless interests are not included in this transaction.
With this acquisition, AirTouch will rank as the second largest
wireless provider in the United States, based on third quarter 1997
proportionate customers.
The companies value the transaction at about $5.7 billion. U S WEST
Media Group will receive approximately $1.6 billion in AirTouch dividend-bearing
preferred stock and about $2.7 billion in AirTouch common stock. Also, U S WEST
Media Group will transfer approximately $1.4 billion of debt to AirTouch.
Upon closing, AirTouch will own U S WEST Media Group's U.S. cellular
property, U S WEST NewVector Group, and its interest in PCS provider PrimeCo
Personal Communications, thereby increasing AirTouch's ownership interest in
PrimeCo from approximately 25 to 50 percent. By bringing a tax-efficient close
to a very successful partnership, the merger is an important strategic milestone
for both companies, enhancing AirTouch's wireless scale and U S WEST Media
Group's focus on broadband in the U.S. and abroad, and wireless internationally.
According to AirTouch chairman and CEO Sam Ginn, "With this
acquisition, AirTouch casts a strong vote of confidence in our industry's future
and reinforces our commitment to wireless. By adding the U.S. wireless interests
of U S WEST Media Group, we'll significantly bolster our operating scale and
expand our footprint. And we'll do so by taking on more debt and issuing
preferred stock, thereby minimizing the number of shares of AirTouch common
stock issued."
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"We are very pleased with this agreement. It provides great value for
great properties. It allows for a streamlined, tax-efficient culmination of our
partnership with AirTouch while allowing us to focus our resources on our core
businesses. Our broadband strategy will benefit from reduced leverage, increased
capital availability and enhanced management focus. In short, it's the right
deal for both our shareowners and customers," said Chuck Lillis, president and
CEO of U S WEST Media Group.
As a result of the merger, AirTouch will add to its proportionate U.S.
wireless portfolio 2.2 million cellular customers in 12 states and 62,000
PrimeCo customers, based on third quarter 1997 proportionate results. The
company will expand its wireless footprint to cover 34 million more POPs.
The change of ownership will be transparent to most NewVector
customers. The two companies have been operating their U.S. cellular properties
as part of a joint venture agreement since July 1994, and NewVector began using
the AirTouch Cellular brand more than a year ago. In addition, NewVector
employees will generally follow their work and become AirTouch employees once
the transaction is final.
According to the terms of the merger, the number of AirTouch common
shares to be issued will vary depending on the trading price of AirTouch common
stock during a 30-day period prior to closing. AirTouch will issue approximately
60.8 million shares to U S WEST Media Group if AirTouch stock is trading at $45
or higher, for a total deal value of $5.735 billion. If AirTouch is trading at
$40 or lower, U S WEST Media Group will receive approximately 67.1 million
AirTouch shares, for a total deal value of $5.685 billion.
AirTouch's earnings per share dilution, primarily due to the
amortization of acquisition intangibles, is expected to peak around $0.40 in
1999 and decline thereafter. The company plans to pursue cost savings to
mitigate this dilution. The company does not expect a change in its investment
grade credit ratings as a result of the transaction.
Once consummated, the transaction will replace the 1994 multi-phased
joint venture agreement.
Closing of the merger, which is expected about the middle of this year,
is subject to Hart-Scott-Rodino clearance and other approvals. Shareowner
approvals are not required.
AirTouch Communications is a global wireless communications company,
with interests in cellular, paging, and personal communications services in the
United States, Belgium, Germany, India, Italy, Japan, Poland, Portugal, Romania,
South Korea, Spain, and Sweden, as well as an interest in the Globalstar
satellite system. The company, based in San Francisco, serves more than 10
million proportionate customers worldwide.
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U S WEST Media Group (NYSE:UMG), one of America's largest broadband
communications companies, is involved in domestic and international cable and
telephony, wireless communications, and directory and information services. For
1996, the group had proportionate pro forma revenue of $8.1 billion.
U S WEST Media Group is one of two major groups owned by parent company
U S WEST, Inc. The other major group is U S WEST Communications, which provides
telecommunications services in 14 western and midwestern states. U S WEST has
proposed splitting the two groups into separate public companies sometime after
mid-1998, pending shareowner and other approvals.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995:
Except for the historical information presented, the matters discussed in this
release are forward-looking statements and are subject to risks and
uncertainties that could cause actual results to differ materially. Such factors
include: a change in economic conditions in the various markets served by
AirTouch's operations which would adversely affect the level of demand for
wireless services; greater-than-anticipated competitive activity requiring new
pricing and/or product offerings or resulting in higher acquisition costs;
greater-than-expected customer growth driving increased investment in network
capacity; level of fraudulent activity; impact of new business opportunities
requiring significant up-front investments; the timing of the combination of
AirTouch's and U S WEST Media Group's cellular properties in the U.S.; impact on
capital spending from the deployment of new technologies; and that technologies
will not perform according to expectations. These and other factors related to
the business are described in the Company's 10-K under "Investment
Considerations" and the quarterly reports on Form 10-Q.
