August 15, 1997 3:35 PM PDT
GTE-BBN merger complete
The acquisition was finalized at a meeting today of BBN stockholders, who approved the merger of a GTE subsidiary with BBN. At the time of the meeting, GTE owned about 94 percent of the voting power of the outstanding BBN stock. Each BBN share not owned by GTE was converted into the right to receive $29 in cash.
The deal, which ended rumors of a merger between BBN and AT&T, is expected to help GTE diversify its core business as a local telephone company by adding a new online dimension. It may also be a blow to AT&T, the world's largest telecommunications company.
The acquisition of BBN is part of GTE's strategy to become a national provider of voice, video, and data services. BBN is now part of GTE Internetworking, the business unit responsible for implementing GTE's data strategy.
George Conrades, CEO and president of BBN, was named corporate executive vice president and president of GTE Internetworking on July 9.
Although GTE had previously said its growth rate is expected to reach more than 10 percent in the "foreseeable future," the acquisition is expected to result in flat to slightly positive earnings growth in 1997, moderate growth in 1998, and growth in 1999 of more than 30 to 50 percent.
AT&T held a minority stake in BBN, as well as a close business relationship with the ISP. Cambridge, Massachusetts-based BBN acknowledged that an AT&T acquisition had been discussed but said the talks were canceled. The two companies have entered dispute resolution procedures to resolve "material disagreements regarding the terms of the contract," BBN said in a statement.
The merger announcement in May came on the same day that BBN posted a net loss of $12.2 million, or 58 cents per share, for the third quarter ending March 31. For the March 1996 quarter, it reported revenues of $60.8 million. BBN attributed the revenue growth to the performance of BBN Planet and its interactive services division.