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January 29, 1998

AIRTOUCH AND US WEST ANNOUNCE $5.7BN MERGER DEAL

By CBR Staff Writer

US cellular phone operator AirTouch Communications Inc and US West Media Group Inc are having a second try at the $5bn merger of US West’s cellular holdings with AirTouch, first announced in April last year (CI No 3,307). The original deal failed because it used the Morris Trust procedure, to make the transaction tax efficient, but then was vetoed when Congress stopped allowing Morris Trust-based mergers. Now the pair are back at the table, with a new $5.7bn deal due to be completed mid way thr ough the year, with the transfer of $1.4bn of debt to AirTouch, and the $1.6bn of preferred stock, and $2.4bn in common stock to US West. The deal will make AirTouch the second largest US cellular operator, and see US West moving completely out of the domestic business. US West claims that as the two companies have been operating their cellular operations as a joint venture for over three years the impact on employees and customers will be minimal. US West Media Group, the independent cable and cellular phone half of the baby Bell US West, is now going to concentrate on its core cable operations in the US, with enhanced management focus. But US West will retain its holdings in its international cellular operations such as the One2One mobile venture with Cable and Wireless Plc in the UK.

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