AT&T will spin off AT&T Broadband and simultaneously merge it with Comcast, forming a new company to be called AT&T Comcast Corporation in a transaction that values AT&T Broadband at an aggregate value of $72 billion.
The new company will have approximately 22 million subscribers and a major presence in 17 of the US’ 20 largest metropolitan areas, including Atlanta, Boston, Chicago, Dallas-Forth Worth, Denver, Detroit, Miami, Philadelphia, and San Francisco-Oakland.
It will be the world’s leading provider of broadband video, voice and data services with annual pro forma revenue of approximately $19 billion. The combined company will have a presence in 41 states with approximately 5 million digital video customers, 2.2 million high-speed data customers and one million cable telephony customers.
AT&T Comcast Corporation plans to bring a choice in local telephone service to more than 38 million homes passed by its cable systems. The new company’s telephony footprint will also allow it to develop and deploy new broadband applications such as video on demand and interactive television.
AT&T’s decision, which received unanimous approval and full support by its Board of Directors, culminates a process that began last July when the AT&T Board directed management to assess strategic and financial alternatives for its Broadband unit.
In the deal, AT&T shareholders will receive approximately 0.34 shares of AT&T Comcast Corporation for each share of AT&T they own (subject to adjustment based on the number of AT&T shares at closing). Comcast shareholders will receive one share of AT&T Comcast Corporation for each Comcast share they own.
AT&T shareowners will own a 56% economic stake and about a 66% voting interest in the new company. The Roberts family, which owns Comcast Class B shares, will control one third of the new company’s outstanding voting interest.
AT&T Comcast Corporation’s assets will consist of both companies’ cable TV systems, as well as AT&T’s interests in cable television joint ventures and its 25.5% interest in Time Warner Entertainment, and Comcast’s interests in QVC, E! Entertainment, The Golf Channel, and other entertainment properties.
The new company will assume nearly $20 billion in debt and other liabilities from AT&T and its subsidiaries, as well as $5 billion of AT&T subsidiary trust convertible preferred securities held by Microsoft Corporation, making the aggregate value of the transaction to AT&T shareholders worth $72 billion, based on the closing price of Comcast Class K stock on December 19th.