AT&T Wireless recently had planned to cut 1,900 jobs from a work force of 31,000 by the end of 2005. These conditions led the company to put itself up for sale January 22, 2004.
Initially, there were several international and regional companies involved in the bidding. In the end it became a fierce bidding war between Cingular Wireless and Vodafone. Vodafone bowed out after reportedly offering $38 billion for AT&T Wireless, but not before driving the Cingular's bid up from it original $25 billion.
Cingular's purchase of AT&T Wireless for $41 billion, the largest cash acquisition ever is expected to close in the fourth quarter of this year. Cingular also will assume $6 billion of debt owed by AT&T Wireless. Under the terms of the deal Cingular will acquire AT&T Wireless for $15 a share in cash. The combined company will carry the Cingular name.
The deal is still subject to approval by AT&T Wireless shareholders and federal regulators. The two companies, BellSouth and SBC, set a limit on the amount of assets they would be willing to sell to win regulatory approval for the deal. If that amount exceeds $8.25 billion, the companies could walk away from the deal, according to the filing with the U.S. Securities and Exchange Commission. Although, if every thing goes as planned, it would be a boon for Cingular's efforts to cut costs, fill service gaps and expand its spectrum, or radio frequency, in several key U.S markets, as well as enabling it to offer wireless Internet access at broadband speed. .
There are several major factors that make AT&T the right opportunity, both companies use the same wireless standard, GSM (Global System for Mobile communications), making the combination of networks less complicated. The firms also have complementary customer bases: Cingular is strong with consumers, AT&T Wireless with businesses. Significant savings are expected from melding back-end systems, marketing and capital purchase programs of the two companies.
