AT&T finalized its deal to acquire MediaOne in a cash and stock deal worth around $59bn, based on AT&T’s closing price last Thursday. Chief executive Michael Armstrong says it will be the company’s last big cable purchase, wary that federal regulators probably will not find further acquisitions digestible and anyway, he says, none of them are for sale. However, there will be further swap deals to cluster the cable systems, he says. Microsoft appears to be the pivotal player behind the scenes, first flirting with Comcast and raising the prospect that it would join it in a bidding war with AT&T for MediaOne, then taking a $5bn stake in Ma Bell in return for ensuring that it uses Microsoft operating systems as the basis for the set-top boxes that will deliver TV, telephone and other services over its newly-acquired cable lines. AT&T CEO Michael Armstrong would not discuss any relationship with Microsoft but made clear that any technology deal regarding the set-top boxes will not be exclusive: it will be a multi-vendor environment for both hardware and software, he said. In terms of raw numbers, Comcast and AT&T are swapping a few cable systems with Comcast ending up with a net gain of about 750,000 subscribers. It is paying AT&T about $4,550 per subscriber, or between $3.0bn to $3.5bn in total. However, that is offset slightly by the $1.5bn it will get from MediaOne for breaking its original merger agreement, which was signed in March. Comcast also gets an option to purchase an additional 1.25 million subscribers, worth about $5.7bn, minus debt and other liabilities over the next three years.
Getronics, the Dutch IT services company, has swooped to buy WANg Global for $2bn, creating what it claims is the largest services company in Europe and one of the five largest in the world. While WANg’s annual revenues of $3bn dwarf Getronics’ sales of $1.65bn, the US group has been weakened by its acquisition in March 1998 of Olivetti’s Olsy systems and services division. The cash offer of $29.25 a share is a 15% premium over WANg’s closing price last Monday of $25.50 and Getronics says it represents a 39% premium over the average share price on the last 30 trading days. Headquarters of the combined company will be in Amsterdam and WANg’s chairman and CEO Joseph Tucci will join Getronics’ five- person board.
Microsoft decided to buy its way further into the US and UK broadband delivery markets by taking a $5bn stake in AT&T and purchasing the 30% stake in Telewest Communications currently owned by MediaOne Group. AT&T is in the process of acquiring the MediaOne cable system for about $62bn. AT&T will begin running trials later this year in three unnamed US cities using set-top boxes running Microsoft Windows CE. The first city will be one of the 10 largest metropolitan areas, the second will be a small city and the size of the third is yet to be determined. However the third will be different from the other two in one key area. In addition to using CE in the set-tops in the first two cities, AT&T will also use Microsoft server software to deliver the content to those boxes, delivering email and interactive television by the second quarter of next year.
Box Hill Systems said its $57m acquisition of SAN storage supplier Artecon gives it a shot at being the number three supplier of departmental disk subsystems behind EMC and Data General’s Clariion unit. The stock swap buy will bring Box Hill up to 400 people with revenue of around $200m.
