Comcast, AT&T Broadband in $52 Billion Deal
N E W Y O R K, Dec. 20 -- In the biggest corporate merger of 2001, Comcast is taking over AT&T's broadband unit for $52 billion to create a new cable powerhouse.
If approved by government regulators, the deal would create the biggest cable company in the United States, with 22.3 million subscribers. AT&T Broadband is the nation's largest cable company, with 13.8 million customers, and Comcast ranks third, with 8.5 million.
AT&T will spin off its cable unit into a separate company and merge the newly-formed entity with Comcast at the same time.
"If you think broadband has a great future, this accelerates that," said Comcast President Brian Roberts at a press conference today announcing the merger.
"This is all about putting two companies to grow, even faster than on our own," said AT&T's CEO, Michael Armstrong.
Investors had a mixed reaction to the deal, with AT&T's stock price rising in morning trading $1.41 to $18.21, while Comcast fell $2.24 to $35.83.
Five-Month Bidding War
The merger, first announced Wednesday night, concludes an unusual five-month bidding war for AT&T Broadband that began five months ago, when Comcast offered $41 billion — only to see it shot down.
Subsequent offers from AOL Time Warner — the nation's second-biggest cable company, with 12.7 million subscribers — and Cox Communications were also rejected.
As proposed, the deal would involve a confluence of corporate interests. AT&T owns 25 percent of Time Warner Entertainment — part of the AOL Time Warner empire — while Microsoft owns a $5 billion stake in AT&T Broadband, which will be converted into an equivalent chunk of the new company.
AT&T shareholders will control 56 percent of the new company, but Roberts will be the CEO of the new company, and the Roberts family will control about one-third of the voting shares.
Antitrust Questions
Like any major corporate merger creating a new industry leader, the Comcast-AT&T deal is sure to bring about close antitrust scrutiny from the government.
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