AT&T Bids $62B For MediaOne

AT&T made a surprise $62 billion bid for cable operator MediaOne Group late Thursday, topping Comcast's previous offer by 17 percent.

Ma Bell said it's offered $87.38 a share in cash and stock based on Thursday's closing prices, not including $4.5 billion in assumed debt and preferred equity. AT&T said it will pay $30.85 in cash plus 0.95 shares for each MediaOne share. Including debt the deal is valued at about $62 billion.

AT&T said its bid exceeds Comcast's offer by $8.6 billion and represents a 26 percent premium over MediaOne's current stock price. MediaOne stock (UMG) rose 2 9/16 to 69 1/2 Thursday. AT&T (T), a component of the Dow Jones Industrial Average, dipped 1/4 to 56 3/4.

The long-distance company is also offering cash as well as stock, in contrast to Comcast's all-stock offer.

"Combining AT&T and MediaOne means that far more American consumers will have a choice in local phone service," AT&T chief executive C. Michael Armstrong said in a statement.

There was no immediate comment from Comcast.

Earlier this year, Comcast agreed to acquire Media One, a spin-off of Baby Bell local phone carrier U S West (USW), in a move to become the third largest domestic cable operator.

Comcast is aiming to offer users high-speed access to the Internet, and eventually, local and long-distance phone service, making it a potential threat to Ma Bell.

AT&T, for its part, would further expand its cable holdings and extend its reach into American homes and businesses. Right now the Baby Bells control most local phone lines, thwarting the ambitions of companies such as AT&T to be "one-stop" providers of telecom services.

To get around the Bells, AT&T recently acquired Tele-Communications Inc., the second largest U.S. cable operator, and struck a deal with the largest, Time Warner (TXW), to offer high-speed services over its cable network.

Written By Jeffry Bartash, CBS MarketWatch