GTE To Buy Ameritech Assets
The snarl of Baby Bell deals and alliances got thicker Monday as GTE Corp. agreed to acquire half the cellular assets of Ameritech for $3.27 billion.
The deal would satisfy U.S. Justice Department conditions for approval of SBC's $79 billion takeover of Ameritech and eventually make Bell Atlantic, which plans to acquire GTE for $76 billion in stock, the biggest cellular provider in the United States.
Under the agreement, GTE and privately held Georgetown Partners will acquire Ameritech's cellular properties in Chicago, St. Louis and surrounding areas of Illinois, northwestern Indiana and Missouri. The territories cover 11.4 million people and encompass nearly 1.5 million customers, Ameritech said.
GTE said the purchase would be "slightly dilutive" to 1999 earnings. It will be financed with debt.
If GTE's agreement to be acquired by Bell Atlantic and its purchase of Ameritech's assets are approved, Bell Atlantic would cover two-thirds of the U.S. population and become the nation's largest cellular provider with 13 million customers.
Bell Atlantic, which aspires to become a national, all-purposes telecom provider, has been actively seeking to flesh out a coast-to-coast wireless network. Last December, it tried to buy cellular operator AirTouch Communications (ATI), but lost out to a higher bid from Vodafone Plc (VOD).
The U.S. Justice Department decided last month to allow SBC to acquire Ameritech under the condition that the combined companies sell off overlapping cellular properties. Ameritech said the pending sale of to GTE would satisfy that requirement.
The two companies still have to win approval from the Federal Communications Commission, which has expressed greater reservations about the deal. And last week, Virginia regulators objected to the merger, the first state to do so.
Up to 1,700 Ameritech employees will transfer to GTE as a result of the sale, the companies said. See press release. The companies have previously agreed with their unions not to reduce employment levels associated with a sale.
Shares of Ameritech (AIT) were flat at 60 1/4 in recent trading. SBC (SBC) rose 1/8 to 49 7/8. And GTE (GTE) edged up 1/4 to 61.
Written By Jeffry Bartash, CBS MarketWatch