NEW YORK (CNNfn) - AT&T Corp. will meet to discuss Comcast Corp.'s unsolicited $44.5 billion bid for its broadband unit, but a decision is not expected for a couple of weeks, a source familiar with the situation told CNNfn.com Tuesday.|
New York-based AT&T (T: down $0.36 to $20.28, Research, Estimates), the nation's biggest long-distance telephone and cable television company, must meet with Comcast to evaluate the proposal to meet its fiduciary duty to explore all reasonable offers.
Philadelphia-based Comcast (CMCSA: down $0.11 to $38.34, Research, Estimates), the No.3 U.S. cable provider, disclosed its all-stock offer Sunday for AT&T's broadband unit. The Comcast bid, totaling $58 billion, includes $13.5 billion in assumed debt and is the largest U.S.-based announced merger since the $124.5 billion AOL Time Warner pairing announced in January 2000.
The combined Comcast-AT&T broadband would create the biggest broadband communications provider, with about 22 million subscribers and leading positions in eight of the top 10 U.S. markets.
News of the Comcast offer continued to affect AT&T shares, which surged more than 10 percent Tuesday, while shares of Comcast fell marginally.
Under its offer, Comcast also would acquire AT&T's interests in Time Warner Entertainment, Cablevision, and Rainbow Media by assuming more debt and issuing more equity to reflect their value. The deal would dilute the value of Comcast shareholders' existing stock as the company plans to issue an additional 1.05 billion shares to pay for the AT&T cable assets. AT&T investors would have majority economic and voting interest in the new combined company.
Comcast still must specify how much equity it would issue to fund its purchase of AT&T's interest in Cablevision, Rainbow Media and Time Warner Entertainment. AT&T also must evaluate the broadband business and hire bankers as well as hold additional meetings with Comcast, the source said.
AOL Time Warner, Vivendi SA (V: down $1.25 to $53.63, Research, Estimates), Charter Communications (CHTR: down $0.22 to $22.73, Research, Estimates) and Cox Communications (COX: down $0.48 to $41.58, Research, Estimates) all have been rumored to be preparing similar bids. AOL Time Warner (AOL: down $2.08 to $48.10, Research, Estimates) is the parent company of CNNfn.com.
"There have been no overtures from others right now," the source said.
Comcast could not be reached from comment while AT&T declined to comment.
Malone off AT&T board early
On Tuesday, Liberty Media Corp. Chairman John Malone resigned from AT&T's board one month early. Malone had been set to leave Aug. 10 after AT&T had completely spun off Liberty Media, which currently trades as a tracking stock.
Liberty Media Corp. will begin trading as an independent company Aug. 10 on the New York Stock Exchange under the ticker symbols "LMC.A" and "LMC.B."
New York-based AT&T is spinning off Liberty, its television programming unit, as part of its acquisition of Tele-Communications Inc. in March 1999. Englewood, Colo.-based Liberty (LMG.A: down $0.40 to $15.66, Research, Estimates) has stakes in various cable channels, including Discovery Channel, E! and USA Networks.
Malone left because he would not be involved in evaluating Comcast's bid and reportedly called the offer "insufficient."
AT&T had planned on holding one more board meeting until Malone's departure and the primary topic of the meeting will be the Comcast's proposal. Malone knew he was going to be excluded so decided to "accelerate his departure," the source said.
"He was leaving in four weeks anyway," the source added. "He would have been excluded from the conversations."