Five months after being rejected in its bid to buy AT&T's cable division, Comcast Corp. convinced AT&T's board to approve a $52 billion deal to create a cable behemoth.
The merger is the
largest announced in 2001 and would create a combined company with 22.3 million cable subscribers - much bigger than AOL's Time Warner Cable, which has 12.7 million subscribers. The new company will
have cable subscribers in 17 of the country's 20 largest metropolitan areas and a presence in 41 states.
New York-based AT&T will spin off its cable division and simultaneously merge it with
Philadelphia-based Comcast.
The deal also includes AT&T's 25 percent stake in Time Warner Entertainment and the assumption of $20 billion in AT&T debt. Microsoft Corp.'s $5 billion stake in
AT&T Broadband will be converted into shares of the new company.
The deal ended a bidding contest for AT&T Broadband that started five months ago when No. 3 cable operator Comcast mounted a
$41 billion hostile bid for AT&T's cable unit. Offers from bidders AOL Time Warner and Cox Communications were rejected by the AT&T board.
Michael Armstrong, AT&T's chairman and chief
executive, will serve as chairman of the new company - to be named AT&T Comcast Corp. - instead of retiring from AT&T in 2003 as planned. Brian Roberts, Comcast's president, will be the combined
company's chief executive.