AT&T Canada, MetroNet To Merge
Mar. 04, 1999
NEW YORK (AP) _ AT&T Corp. has agreed to merge its Canadian operations with MetroNet Communications Corp., a local Canadian phone service supplier to businesses, in a deal that values Metronet at at least $2.3 billion.
The deal announced today would enable the merged company to offer business customers in Canada everything from long-distance to Internet to local phone service.
It would also extend AT&T's strategy of creating a one-stop shop for telecommunications.
AT&T, the biggest U.S. long-distance provider, initially plans to merge its AT&T Canada operations with Metronet's business in a company to be called AT&T Canada Corp.
The new company would have annual revenue of about $925 million, more than 4,000 employees and over $2.3 billion in assets.
The merger will be carried out in several stages. After the first stage, Metronet shareholders would indirectly own 69 percent of the merged company and AT&T would have the remaining 31 percent.
The second stage of the deal will occur after the companies receive regulatory approval for the merger. AT&T has agreed to buy all of Metronet's shares for at least 75 Canadian dollars per share _ $49.50 at current exchange rates _ or the appraised fair market value of Metronet shares at the time.
At the minimum price, that would value Metronet's 45.5 million shares at about $2.3 billion. The payment would be cash, stock or some combination.
The deal has been approved by the boards of both companies, but it must be approved by MetroNet shareholders at a meeting expected to be held in May.
But if AT&T doesn't purchase the shares before June 30, 2000, the minimum price per share would be increased by 16 percent a year through June 30, 2003.
AT&T's stock was up $1.12 1/2 to $84.50 a share in early New York Stock Exchange today.
On Wednesday, MCI WorldCom announced an agreement with Bell Canada that will allow the U.S. company to extend its phone service into Canada.