AT&T Bid Moving Closer
The rumoured bid by Cingular Wireless for AT&T Wireless took a new turn yesterday when the Reuters news agency reported that a formal bid has now been made for the company. The bid price was not specified, but it is believed to be an all cash offer with a healthy premium on AT&T Wireless's current valuation of around US$27 billion. As of last October, SBC and BellSouth had about $10 billion in cash and cash equivalents on their balance sheets, suggesting that they are tapping the debt markets to fund the all-cash offer.
Both companies have refused to comment.
The merged Cingular and AT&T Wireless would have around 45 million customers, overtaking current market leader Verizon Wireless, which had about 36 million customers at the end of the third quarter of last year.
There is also speculation that Vodafone may jump in with a counter bid for the company as it would make for a closer match with its existing GSM networks than its 45% stake in Verizon Wireless. The company has however repeatedly said that it is happy with its Verizon holding.
"We believe investors currently do not expect Vodafone to react at this stage, and that may still be the most likely outcome," said broker Cazenove in a note to investors. "The key question is whether circumstances have now changed sufficiently to act as a catalyst for an aggressive Vodafone move."
Posted to the site on 21st January 2004
