AT&T announced its all-stock acquisition of BellSouth on March 5, 2006. The often-quoted $67 billion was the deal’s approximate announcement-date equity value—not a fixed cash payment or the value of the shares when the transaction closed. AT&T separately put the transaction value, including specified debt, at about $89 billion. The merger closed on December 29, 2006, giving AT&T full ownership of AT&T Mobility, formerly Cingular Wireless.
How the all-stock acquisition worked
Under the agreement announced March 5, 2006, each BellSouth common share was to be exchanged for 1.325 shares of AT&T common stock. BellSouth shareholders therefore received AT&T shares rather than a cash purchase price.
AT&T’s announcement valued the exchange at about $37.09 per BellSouth share, using AT&T’s closing share price on March 3, 2006. On that basis, the offer represented a 17.9% premium to BellSouth’s March 3 closing share price. AT&T described the resulting equity consideration as approximately $67 billion; shareholder materials specified approximately $67.1 billion using the same March 3 AT&T closing price.
Why reports give different deal values
The figures describe different valuation bases and dates. They are not competing estimates of one unchanging amount. In particular, the $67 billion headline refers to equity value at announcement, while the larger transaction-value figure includes specified debt.
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| Figure | What it measures | Basis and date |
|---|---|---|
| Approximately $67 billion (or $67.1 billion in shareholder materials) | Equity consideration | Announcement-date calculation using AT&T’s March 3, 2006 closing share price; reported by AT&T in 2006. |
| Approximately $89 billion | Total transaction value, including BellSouth debt net of cash and BellSouth’s proportionate share of Cingular external debt net of cash | Announcement-date figure reported by AT&T in 2006. |
| $66.798 billion | Accounting transaction value | Reported in AT&T’s 2006 annual report; calculated using an average AT&T closing share price over a period around the announcement, capitalized transaction costs, and other items. |
| Approximately $86.9 billion | Consideration received by BellSouth shareholders | Reported in AT&T’s 2006 annual report using AT&T’s $35.75 closing share price on December 29, 2006, the last trading session before the merger closed. |
Because the deal exchanged shares, the share consideration’s dollar value moved with AT&T’s stock price. The announcement-date estimate and the closing-date estimate consequently use different AT&T share prices. The accounting transaction value uses yet another method, including transaction costs and other items. Those distinctions explain why the later figures do not match the headline value.
What regulators concluded
The U.S. Department of Justice Antitrust Division closed its investigation on October 11, 2006. It examined areas where AT&T and BellSouth competed, including residential local and long-distance telephone service, telecommunications for business customers, Internet services, and the merger’s implications for future wireless broadband competition.
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The division concluded that the proposed transaction was not likely to lessen competition substantially. That was the DOJ’s assessment of the proposed merger; it does not establish that the deal had no effect in every market or for every customer. The FCC’s consent to transfer control of BellSouth licenses and authorizations was also a closing requirement, according to SEC-filed merger materials.
When the merger closed and what changed
AT&T reported that the acquisition closed on December 29, 2006. As part of the transaction, AT&T acquired BellSouth’s 40% economic interest in AT&T Mobility, then formerly known as Cingular Wireless. AT&T thereby held 100% of AT&T Mobility.
What the deal documents do—and do not—show
The official materials establish the exchange ratio, valuation figures and their bases, regulatory process, closing date, and ownership consequence. They do not establish a causal estimate of how the merger changed consumer prices or service quality. Those outcomes should not be inferred from the transaction’s dollar value or the DOJ’s competition conclusion alone.
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