Cingular, Vodafone battle for AT&T
 |
Vodafone is said to be considering a bid of $35 billion for AT&T.
Story Tools
YOUR E-MAIL ALERTS
|
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.
Or, visit Popular Alerts for suggestions.
|
|
PHILADELPHIA (Reuters) -- Cingular Wireless has raised its offer to buy AT&T Wireless Services Inc., while rival Vodafone Group Plc. continues to mull a potential bid that could value the No. 3 U.S. wireless company at $35 billion, sources familiar with the situation say.
After a deadline of 5 p.m. ET (10pm GMT) Friday passed, details of Cingular's sweetened offer were not immediately available.
But sources familiar with the bid said the price topped Cingular's initial offer of $30 billion, or $11 a share.
It was not clear whether Vodafone Group Plc had pulled the trigger on its bid, but one source familiar with the talks said the company had mulled an offer as rich as $35 billion, or about $12.50 a share.
Vodafone, Cingular and AT&T Wireless declined to comment.
NTT DoCoMo Inc., which owns 16 percent of AT&T Wireless, Friday decided against submitting a bid after determining it lacked the staff or bulk to realistically acquire and operate a company as large as AT&T Wireless, one source said.
The Redmond, Washington-based AT&T Wireless plans to review the bids Saturday and spend the President's Day holiday weekend pouring over the details, and a decision could come as early as next week, sources said.
But analysts and traders said AT&T Wireless had no reason to rush and may wait until its self-imposed Feb. 29 deadline, especially since the two suitors may return in the coming days with sweetened offers if they realize they were outbid.
"Why rush to a decision? Make them sweat it out and worry whether or not they won and see if you can get them to come back with better offers," said one arbitrageur, who declined to be named.
Hopes of a bidding war sent AT&T Wireless shares to 12- month highs of $11.98, valuing the group at $32.56 billion. The stock closed Friday at $11.82, up 15 cents, or 1.29 percent, on the New York Stock Exchange, where it was the most actively traded stock.
The heated interest in AT&T Wireless comes even as the company recently suffered an unexpected fourth-quarter loss and warned that technical and customer-service problems would lead to drop in customers throughout the first half of 2004.
In January, AT&T Wireless lost nearly 4 percent of its customers and saw its operating income fall more than 20 percent from a year ago, sources close to the situation have said.
While some Vodafone investors remain unconvinced about the merits of any bold offer, a growing number believe Chief Executive Arun Sarin would fight for an asset that would give the group long sought-for control of a company in the world's most powerful economy and bring its brand across the Atlantic.
"We are supportive of Vodafone, but on the information currently available, we are skeptical as to whether the deal at the prices talked about will generate an acceptable financial return," said David Cumming, the head of UK equities at Standard Life Investments.
Analysts were split on which company would be the victor.
"If Vodafone is in, they're in it to win. Vodafone doesn't bid to lose. They might force Cingular to look at T-Mobile" and give up on AT&T Wireless, Patrick Comack of Guzman &Co. said on CNBC.
Meanwhile, Cingular, the No. 2 U.S. wireless company, has the deep pockets of its parent companies, SBC Communications Inc. and BellSouth Corp. to make an aggressive bid.
"It is scale -- Cingular, versus scope -- Vodafone," said Raul Katz, head of the telecommunications practice at Booz Allen Hamilton.
"Cingular is betting on cost synergies, particularly the opportunity to work on redundant infrastructure overhead, while Vodafone is betting on economies of scope, trying to apply the same aggressive recipe they have used in Europe to the U.S.," Katz added.
Copyright 2004
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
