Filed by AT&T Corp.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: AT&T Corp.
Commission File No. 001-01105
On December 19, 2001 AT&T Corp. issued the following Press Release.
[AT&T Logo] [Comcast Logo]
NEWS RELEASE
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For more information, contact:
Eileen M. Connolly - AT&T
908-221-6731
Adam Miller, Brian Faw - Comcast
The Abernathy MacGregor Group
212-371-5999
FOR RELEASE WEDNESDAY DECEMBER 19, 2001
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AT&T BROADBAND TO MERGE WITH COMCAST
CORPORATION IN $72 BILLION TRANSACTION
Strategic Combination Creates One of the Most Powerful Communications, Media
and Entertainment Companies in the World
Nation's Premiere Broadband Services Network Will Serve More Than 22 Million
Subscribers
NEW YORK AND PHILADELPHIA -- AT&T (NYSE: T) and Comcast Corporation (NASDAQ:
CMCSA, CMCSK) today announced that their Boards of Directors approved a
definitive agreement to combine AT&T Broadband with Comcast in a transaction
that values AT&T Broadband at an aggregate value of $72 billion. The transaction
will create the world's pre-eminent broadband services company and is expected
to be tax-free to shareowners.
The new company, to be called AT&T Comcast Corporation, will be one of the
leading and most powerful communications, media and entertainment companies in
the world. It
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will have approximately 22 million subscribers and a major presence in 17 of the
United States' 20 largest metropolitan areas, including Atlanta, Boston,
Chicago, Dallas-Fort 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 will begin life with a clear mandate to aggressively
expand the availability of those services throughout its service areas,
including 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 have national reach and its scale will 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 rigorous process that began last July when the AT&T
Board directed management to assess strategic and financial alternatives for its
Broadband unit to create long-term shareowner value.
"AT&T Comcast will create value for its customers, shareowners and employees by
bringing more services to more people more quickly," said C. Michael Armstrong,
Chairman and CEO of AT&T. "This is a leap forward in realizing a vision that
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thousands of AT&T people have worked toward - bringing greater choice in
affordable broadband video, voice and data services to even more American homes.
AT&T Broadband and Comcast can accomplish more together than we could alone. Our
shareowners and our employees will both benefit from the industry-leading growth
we will achieve."
Brian L. Roberts, president of Comcast Corporation, said, "Bringing together
AT&T Broadband and Comcast, creates a company with a national footprint and a
powerful growth platform uniquely positioned to efficiently deliver content and
entertainment to its customers. I look forward to working with Mike and the AT&T
Broadband team to achieve the full potential of this tremendous new company.
"We are particularly excited about the telephony prospects," Brian Roberts
continued. "The size of our telephony footprint, combined with AT&T's expertise
and leadership in the telephony space, will enable us to accelerate the
deployment of telephone services to many new markets."
"This transaction is the most rewarding and important step Comcast has taken
since I started the company nearly four decades ago," said Ralph J. Roberts,
chairman of Comcast Corporation. "Combining Comcast with AT&T Broadband is a
once in a lifetime opportunity that creates immediate value and positions the
company for additional growth in the future. Shareholders, employees and
customers alike are poised to reap considerable benefits from this remarkable
union."
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Terms of the agreement
----------------------
o Under the terms of the definitive agreement, 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.
o 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.
o AT&T shareowners will own a 56 percent economic stake and about a 66
percent 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.
o 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 percent interest in Time Warner Entertainment,
and Comcast's interests in QVC, E! Entertainment, The Golf Channel, and
other entertainment properties.
o 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 19.
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o AT&T shareowners would receive value equivalent to $13.07 per AT&T
share based on Comcast's closing share price on Wednesday, December 19,
while retaining complete ownership of AT&T's traditional communications
businesses.
In conjunction with the transaction, Microsoft Corporation has agreed to convert
the $5 billion of AT&T subsidiary trust convertible preferred securities into
115 million shares of AT&T Comcast Corporation.
AT&T and Comcast will each contribute five Board members to the new company and
they will jointly select two additional members who have no current affiliation
with either company. Brian Roberts, 42, will be Chief Executive Officer of the
new company. As part of the agreement, Armstrong will serve as Chairman of the
new company when the merger closes instead of retiring from AT&T in May 2003 as
he had planned. The AT&T Comcast Corporation transaction is expected to close at
the end of 2002. Until then, Armstrong, 63, will remain Chairman and CEO of
AT&T. AT&T Comcast Corporation will be headquartered in Philadelphia and
maintain executive offices in the New York City area.
Armstrong and Roberts have also established a transition team to address issues
arising from the merger of AT&T Broadband and Comcast from today's announcement
through the closing. The members of the transition team are Steven Burke,
president of Comcast Cable, Charles H. Noski, chief financial officer of AT&T,
William Schleyer, president
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and CEO of AT&T Broadband, and Lawrence Smith, executive vice president of
Comcast Corporation.
Accounting for non-strategic assets that have been, or will be, sold, AT&T
originally paid about $4,100 per subscriber for TCI and MediaOne, largely in
AT&T stock. Today's announcement values AT&T's cable systems at approximately
$4,500 per subscriber based on today's closing price of Comcast stock and gives
AT&T shareowners majority ownership of the nation's leading broadband services
company with an initial total aggregate value of approximately $120 billion.
The merger of AT&T Broadband and Comcast is subject to regulatory review,
approval by both companies' shareholders and certain other conditions. AT&T also
intends to proceed with other aspects of its previously announced restructuring,
including the creation of a tracking stock for its consumer services unit, which
is expected to be fully distributed to AT&T shareholders following shareholder
approval in mid-2002.
Following the separation of AT&T Broadband and the establishment of the AT&T
Consumer tracking stock, the familiar "T" stock symbol will reflect the
financial results of AT&T Business, which will retain ownership of the "AT&T"
brand. AT&T Business is one of the world's leading providers of enterprise voice
and data communications, serving more than 4.2 million customers. For the 12
months ended September 30, 2001, AT&T Business had revenue of more than $28
billion and earnings before interest and taxes (EBIT), excluding other income,
asset impairments and pre-tax equity earnings, of
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approximately $5 billion. In the same period, AT&T Consumer had revenue of
nearly $16 billion and EBIT, on the same basis, of about $5.4 billion, with
margins that are three times those of its largest competitor.
Credit Suisse First Boston and Goldman Sachs acted as financial advisors to
AT&T. Morgan Stanley, JP Morgan, Merrill Lynch and Quadrangle Group acted as
financial advisors to Comcast. Wachtell, Lipton, Rosen & Katz is legal advisor
to AT&T. Davis Polk & Wardwell is legal advisor to Comcast.
About AT&T
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AT&T (http://www.att.com) is among the world's premier voice, video and data
communications companies, serving consumers, businesses and government. Backed
by the research and development capabilities of AT&T Labs, the company runs the
world's largest, most sophisticated communications network and is the largest
cable operator in the U.S. The company is a leading supplier of data, Internet
and managed services for businesses and offers outsourcing, consulting and
networking-integration to large businesses.
About Comcast
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Comcast Corporation (www.comcast.com) is principally engaged in the development,
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management and operation of broadband cable networks and in the provision of
content through principal ownership of QVC, Comcast-Spectacor and Comcast
SportsNet, a controlling interest in E! Entertainment Television and through
programming investments.
Comcast's Class A Special Common Stock and Class A Common Stock are traded on
The Nasdaq Stock Market under the symbols CMCSK and CMCSA, respectively.
# # #
NOTE TO FINANCIAL MEDIA: AT&T executives will discuss today's announcement on a
two-way conference call for financial analysts at 8:30 a.m. ET. Reporters are
invited to listen to the call. U.S. callers should dial 800-230-1092 to access
the call. Callers outside the U.S. should dial 612-332-0342.
A replay of the event will be available on the AT&T web site beginning shortly
after the presentation. The Web site address is http://www.att.com/ir.
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AT&T executives will hold a press conference and conference call at 11:00 a.m.
in the Nassau Suite of the New York Hilton. Reporters are invited to dial into
the conference and ask questions. U.S. callers should dial 888-276-9996 to
access the call. Callers outside the U.S. should dial 612-333-4911.
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The New York Hilton is located at 1335 Avenue of the Americas.
The foregoing are "forward-looking statements" which are based on management's
beliefs as well as on a number of assumptions concerning future events made by
and information currently available to management. Readers are cautioned not to
put undue reliance on such forward-looking statements, which are not a guarantee
of performance and are subject to a number of uncertainties and other factors,
many of which are outside AT&T's control, that could cause actual results to
differ materially from such statements. For a more detailed description of the
factors that could cause such a difference, please see AT&T's filings with the
Securities and Exchange Commission. AT&T disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. This information is presented solely to
provide additional information to further understand the results of AT&T.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which the offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction. No offering
of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, AT&T and Comcast will file a joint proxy
statement/prospectus with the Securities and Exchange Commission. INVESTORS AND
SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN
IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors
and security holders may obtain a free copy of the joint proxy
statement/prospectus (when available) and other documents filed by AT&T and
Comcast with the Commission at the Commission's web site at http://www.sec.gov.
Free copies of the joint proxy statement/prospectus, once available, and each
company's other filings with the Commission may also be obtained from the
respective companies. Free copies of AT&T's filings may be obtained by directing
a request to AT&T Corp., 295 North Maple Avenue, Basking Ridge NJ 07920. Free
copies of Comcast's filings may be obtained by directing a request to Comcast,
1500 Market Street, Philadelphia PA 19102.
PARTICIPANTS IN THE SOLICITATION
AT&T, Comcast and their respective directors, executive officers and other
members of their management and employees may be soliciting proxies from their
respective stockholders in favor of the merger. Information concerning persons
who may be considered participants in the solicitation of AT&T's and Comcast's
stockholders under
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the rules of the Commission is set forth in public filings filed by AT&T and
Comcast with the Commission and will be set forth in the Joint Proxy Statement/
Prospectus when it is filed with the Commission.
Information concerning AT&T's participants in the solicitation is set forth in
AT&T's proxy statement for its special meeting of stockholders, filed with the
Commission on July 3, 2001.