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£31 billion hostile bid for AT&T Broadband

Comcast wants it; AT&T playing safe

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Cable TV company Comcast has made a $44.5 billion (£31.5 billion) hostile bid for AT&T's broadband division. The arm includes the giant telco's cable and Internet interests, including Excite@Home. If the buy were to go ahead, it would create a broadband giant with 22 million subscribers.

The unsolicited bid was made on the same day that AT&T's wireless division became fully independent. However, despite both companies having been in talks for months, AT&T has said it has no plans as yet to sell off Broadband.

The deal came in the form of a letter to chairman and CEO of AT&T Michael Armstrong, which Comcast has posted on its Web site here. Comcast - which claims a merger would benefit both companies to the tune of $1.25 billion a year - is the US' third biggest cable provider. It also owns QVC, which offers TV and Net shopping in the UK.

"This is an extremely compelling combination for AT&T and Comcast shareholders, customers and employees," wrote Comcast chairman Ralph J. Roberts. He also admitted that Comcast and AT&T had been considering this very deal for months, but it was "unfortunate that we were unable to continue our dialogue". No mention of job losses was made, unsurprisingly.

The proposed deal is share-only, and Comcast has also offered to pick up other AT&T interests in Time Warner, Cablevision, and Rainbow Media. AT&T shareholders would retain majority control over the company. The deal, says Comcast, offers AT&T shareholders Comcast shares at $12.60 when they are currently worth $16.80.

Comcast will also pick up AT&T Broadband's $13.5 billion of debt, making the deal worth $58 billion (£41 billion) in total.

AT&T is breaking itself up in a bid to cut its debt and help it become more competitive. Its plans have been paralleled in the UK by BT, also suffering under heavy debt and sluggishness. BT announced last week that its joint venture with AT&T, Concert, is to be scrapped and split between the two behemoths. ®

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Comcast press release and letter

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