AT&T, MediaOne merger a done deal

Telecommunications giant AT&T said today it has completed its $44 billion merger with cable operator MediaOne Group, creating the country's largest cable operator.

The companies said all regulatory approvals for the deal have been obtained. The FCC approved the merger last week. The boards of the two companies approved the deal in May of last year.

The deal is valued around $44 billion, based on AT&T's closing stock price yesterday of $33.50. As previously announced, MediaOne shareholders will receive $30.85 in cash plus 0.95 shares of AT&T stock for every share of MediaOne they hold on the closing date. Based on AT&T's recent stock price, MediaOne shareholders will receive an additional cash payment of $5.42 per MediaOne share.

AT&T plans to issue 606 million shares of common stock and $23 billion in cash to close the transaction. After the merger is complete, there will be approximately 3.7 billion AT&T shares outstanding, and the company expects to have about 5 million AT&T shareholders.

The combined company will become the country's largest cable operator, with about 16 million customers. AT&T said MediaOne will become part of AT&T Broadband, based in the Denver area. MediaOne's services eventually will be renamed under the AT&T brand, the company said.

As reported, the FCC's approval came with significant requirements that will force AT&T to comply with federal cable-ownership limits, which the company would have exceeded. Cable operators are forbidden from controlling, either directly or via joint ventures, more than 30 percent of the market, and although the FCC tweaked those regulations last year, AT&T would have controlled nearly 42 percent of the market.

The FCC gave AT&T three options for attaining compliance, including selling its stake in Liberty Media, the company's cable TV programming unit, or selling MediaOne's 25 percent stake in Time Warner Entertainment.