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AT&T Edges Closer to Victory in Bid for MediaOne Group Inc.

Strategic Insights

— 1 min read

MediaOne's board has accepted an offer from AT&T Corp., valuing the company at $62 billion, after rival bidder Comcast's attempts to top the proposal were dealt a blow when potential partner America Online reportedly dropped out of talks. AT&T's offer, which includes a cash component and voting stock, outdid Comcast's original bid by about $8 billion. Comcast still considers whether to mount another bid, but its chances of success are dwindling. With AT&T's offer in place, the cable provider will likely be left hoping that Microsoft or another company will join forces to help pool the necessary resources to outbid AT&T.

Key Takeaways:

  • AT&T's offer for MediaOne Group Inc. has been accepted by the company's board, valuing the company at $62 billion.
  • The offer includes a cash component and voting stock, outdoing Comcast's original proposal by about $8 billion.
  • Comcast is still considering whether to mount another bid, but its chances of success are dwindling due to the lack of a potential partner.
  • America Online reportedly dropped out of talks with Comcast, which could have pooled resources to outbid AT&T.
  • Microsoft has asked for the necessary information to make a bid, but its true intentions remain unclear.
  • Comcast has other potential partners, including Microsoft co-founder Paul Allen, who has been putting together his own cable company.
  • The battle for MediaOne's set-top boxes is crucial for Microsoft, which wants to sell software to cable companies for high-speed and interactive services.

Statistics:

  • MediaOne's valuation: $62 billion
  • AT&T's offer: $30.85 per share in cash, plus 95% of a share for each MediaOne share
  • Comcast's original offer: $52 billion
  • Debt absorbed by buyers: Partly included in the reports'
  • Stock prices of potential partners: America Online - $124 billion (currently), Microsoft - $403 billion
  • Cash held by Microsoft: $20 billion

Sources:

  • CNBC
  • America Online
  • Microsoft
  • Comcast
  • Time Warner
  • Newhouse
  • Compaq
  • CNN

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