The merger between SBC Communications and Pacific Telesis is far from a done deal, and even further from being straightforward, says analysis in today’s Wall Street Journal. The journal has picked up details of the rules of the potential merger from a filing just placed with the Securities and Exchange Commission which highlights the strictness of the Californian Public Utilities Commission, and its extensive rules regarding change of utility ownership. The worry relates to regulators enforcing rebates or price cuts to pass on benefits from the merger to California subscribers. The merger filing has defenses against this built in, with some automatic adjustments to the price paid and further permissions needed from shareholders, if the numbers slew too much through excessive regulatory costs. In the event of a higher bid coming for Pacific Telesis, a $300 million payment will be made to SBC, notes the Journal. Public hearings are expected to be held to establish local sentiment on regulatory costs.
