Re: SBC buying AT&T
- here's the (at&t)internal release:
From: AT&T Public Relations
Sent: Wednesday, February 02, 2005 2:34 PM
Subject: AT&T TODAY Special Edition - Q&A about the AT&T/SBC Merger
WEDNESDAY, FEBRUARY 2, 2005 2:30 p.m. EST
*** SPECIAL EDITION ***
AT&T and SBC Merger Q&A
Frequently-asked questions, new Web site
offer information about the merger of AT&T and SBC
As promised in yesterday's all-employee audiocast, below is an initial
set of Q&A about the announced merger of AT&T and SBC. We've tried to
address some of the most frequently-asked questions received from
employees in this first round of communication. We will provide
additional Q&A as soon as possible, and will use AT&T TODAY to alert
you that they're available.
We're also launching a Merger Update Web site at: http://infocenter.
att.com/merger/ to provide additional details and to archive
communication on the merger. As the merger progresses, we want to be
sure employees are informed every step of the way. Be sure to write
us at the AT&T Employee Communications mailbox at:
rm-attemployeecomm@... if you have questions we haven't
answered. We can't reply to individuals but will address questions
representative of employee interest.
Financial & Strategic
Why is SBC acquiring AT&T?
The merger of SBC and AT&T is an important next step in the evolution
of the global communications industry. It brings together two
companies with complementary strengths, product sets and customer
bases to capitalize on the opportunities afforded by America's
evolving telecommunications industry in the Internet age. This deal
is about being best positioned to compete in the new IP world. AT&T
operates the most advanced, highest volume, global IP network in the
world. The potential synergies from this transaction are substantial
and very achievable. It gives AT&T the greater financial strength and
stability it needs for success over the long term. It gives SBC a
significant domestic and global presence in the governmental and
large-business customer segments, an area where SBC has less presence
today. We believe that SBC and AT&T have complementary strengths,
assets and customer bases that, together, will help the company offer
more advanced services to customers, grow revenues, and reduce
expenses to a much greater extent, and more quickly, than would have
otherwise been possible.
What are the terms of the deal?
Under the terms of the agreement, stockholders of AT&T will receive
total consideration valued at $19.71 per share at the time the
agreement was signed. That includes 0.77942 shares of SBC common
stock for each common share of AT&T. Based on SBC's closing stock
price on Jan. 28, 2005, this exchange ratio equals $18.41 per share.
In addition, at the time of closing, AT&T will pay its stockholders a
special dividend of $1.30 per share. Altogether, this is a $16
Where will the expected $2 billion in annual cost savings come from?
Almost all of the synergies are expected to come from reduced costs
over and above expected cost improvements from the companies' ongoing
· Nearly half of the total net synergies are expected to come
from network operations and IT, as facilities and operations are
· Approximately 25 percent are expected to come from the
combined business services organizations, as sales and support
functions are combined.
· About 10 to 15 percent of the synergies are expected to come
from eliminating duplicate corporate functions.
· Approximately 10 to 15 percent of expected synergies come
from revenues, as the combined company migrates service offerings to
new customer segments.
Will employees still receive a 2004 bonus and salary merit increase?
Yes, as announced previously, qualified employees will receive a bonus
for 2004 payable in March 2005 and a salary increase effective April
Will there be a 2005 bonus plan?
Yes, we'll soon send you information on the 2005 bonus plan, which
would be payable in 2006 for qualified employees if we meet our
Will the pending merger affect benefits for employees covered under
the collective bargaining agreements?
No, the terms of the current bargaining agreements will remain in
Will the pending merger impact AT&T's management benefits prior to the
close, and how soon after the close might benefits be changed?
AT&T's benefit plans and programs will continue "business as usual"
through the closing in accordance with their terms. Any decisions
regarding benefits after the close will be made by SBC. However,
under the merger agreement, SBC has agreed that employees and former
employees for a period of time after the merger will have compensation
and benefit plans and programs that are no less favorable in the
aggregate than they have at AT&T. This commitment will continue to
the end of the plan year (generally Dec. 31) following the first
anniversary of the closing. For example, if the merger closes in
2006, the commitment will generally apply through Dec. 31, 2007.
Will the Rule of 65 continue to apply in 2005 and 2006?
The expanded eligibility for retirement-related benefits (Rule of 65)
applies to employees covered under the AT&T Force Management Program
with scheduled off-payroll dates before Jan. 1, 2006. (Generally, to
be eligible under the Rule of 65, the employee's age and years of
service must total at least 65 at the off-payroll date.) Should the
merger close in 2006, any extension of the Rule of 65 requires AT&T to
consult with SBC, which we would plan to do. As more information
becomes available, it will be communicated to employees.
Are AT&T's pensions/cash balance accounts secure? Will the plans
change because of the merger announcement prior to the close? Will
the AT&T pension plans continue after the merger?
The AT&T pension plans will not change as a result of the merger
agreement. Individuals currently receiving pensions can be confident
that there will be no disruption in receiving their monthly pension
annuities from AT&T in accordance with the terms of AT&T's pension
plans. You should be aware that under law, companies cannot reduce or
eliminate a person's accrued and vested pension benefit under
tax-qualified plans, such as AT&T's. In addition, AT&T's pension
plans remain well funded. Pension funding is highly regulated under
various Federal laws and our plans are fully in compliance with those
funding rules. Any decisions regarding the pension plans after the
merger closes will be made by SBC, subject to the commitments
What happens to any unvested AT&T restricted stock unit award?
At the time of a change in control as a result of the merger closing,
any unvested AT&T restricted stock unit award, granted on or before
Feb. 3, 2005, would become free of all restrictions, limitations or
conditions and become fully vested.
Will my years of AT&T service be recognized at SBC?
AT&T service will be recognized if employees become covered under
SBC's compensation and benefit plans for eligibility, vesting and
benefit accrual, with the exception of benefit accrual for defined
benefit pension and other retirement plans.
Merger Approval Process
What approvals will be required?
AT&T's shareowners, the FCC, the U.S. Department of Justice, various
state regulatory agencies, and a small number of foreign approvals.
How long do you anticipate regulatory approval will take?
Because it brings together two companies with complementary strengths,
product sets and customer bases, will help advance competition in
several key areas, and will help revitalize America's
telecommunications industry, we believe regulators will review it
expeditiously. That could come as early as the first half of 2006.
We intend to cooperate fully with their reviews and provide the
information they request as quickly as possible.
Where will the new company headquarters be located?
The combined company will be headquartered in San Antonio, but will
continue to maintain a strong employee presence in all of its key
Should I contact my counterpart in SBC to begin the merger transition?
No, we will communicate guidelines soon. Please remember, we are
still separate companies and must continue to operate separately until
Where can I learn more about the merger?
We'll be communicating more information in the weeks and months ahead,
but you can learn more now about the merger by going to the Merger
Update Web site at: http://infocenter.att.com/merger/
Cautionary Language Concerning Forward-Looking Statements
This document contains forward-looking statements within the meaning
of the U.S. Private Securities Litigation Reform Act. Forward-looking
statements are statements that are not historical facts and are
generally identified by the words "expects", "anticipates",
"believes", "intends", "estimates" and similar expressions. These
statements include, but are not limited to, financial projections and
estimates and their underlying assumptions, statements regarding the
benefits of the business combination transaction involving AT&T and
SBC, including future financial and operating results and the plans,
objectives, expectations and intentions of the combined. Such
statements are based upon the current beliefs and expectations of the
managements of AT&T and SBC and are subject to significant risks and
uncertainties (many of which are difficult to predict and are
generally beyond the control of AT&T and SBC) that may cause actual
results to differ materially from those set forth in, or implied by,
the forward-looking statements.
The following factors, among others, could cause actual results to
differ materially from those set forth in the forward-looking
statements: the ability to obtain governmental approvals of the
transaction on the proposed terms and schedule; the failure of AT&T
shareholders to approve the transaction; the risk that the businesses
will not be integrated successfully; the risk that the cost savings
and any other synergies from the transaction may not be fully realized
or may take longer to realize than expected; disruption from the
transaction making it more difficult to maintain relationships with
customers, employees or suppliers; competition and its effect on
pricing, spending, third-party relationships and revenues. Additional
factors that may affect future results are contained in SBC's and
AT&T's filings with the Securities and Exchange Commission ("SEC"),
which are available at the SEC's Web site http://www.sec.gov. Other
than as required by applicable law, AT&T disclaims any obligation to
update and revise statements contained in this presentation based on
new information or otherwise.
In connection with the proposed transaction, SBC intends to file a
registration statement, including a proxy statement of AT&T Corp., and
other materials with the Securities and Exchange Commission (the
"SEC"). Investors and AT&T shareholders are urged to read the
registration statement, including the proxy statement, and other
materials when they are available because they contain important
information. Investors will be able to obtain free copies of the
registration statement and proxy statement, when they become
available, as well as other filings containing information about SBC
and AT&T Corp., without charge, at the SEC's Internet site (http:
//www.sec.gov). These documents may also be obtained for free from
SBC by directing a request to SBC Communications Inc., Stockholder
Services, 175 E. Houston, San Antonio,Texas 78258. Free copies of AT&T
Corp.'s filings may be obtained by directing a request to AT&T Corp.,
Investor Relations, One AT&T Way, Bedminster, New Jersey 07921.
SBC, AT&T Corp. and their respective directors and executive officers
and other members of management and employees may be deemed to be
participants in the solicitation of proxies from AT&T shareholders in
respect of the proposed transaction. Information regarding SBC's
directors and executive officers is available in SBC's proxy statement
for its 2004 annual meeting of stockholders, dated March 11, 2004, and
information regarding AT&T Corp.'s directors and executive officers is
available in AT&T Corp.'s proxy statement for its 2004 annual meeting
of shareholders, dated March 25, 2004. Additional information
regarding the interests of such potential participants will be
included in the registration and proxy statement and the other
relevant documents filed with the SEC when they become available.