Contel Reports $6-Billion GTE Takeover Offer

Contel Corp., a diversified regional telephone company, said today that it has received a takeover offer from GTE Corp. in a stock swap worth $6 billion, extending a recent spate of takeovers in the telecommunications industry while mergers elsewhere have ground to a halt.

The deal, which would be one of the largest ever in the telecommunications industry, proposes that Contel stockholders receive 1.27 GTE shares for each Contel share. Contel has about 158 million shares outstanding. At this morning’s price, that would be about $37.75 a share. GTE was trading at $29.75, down $1.25 from Wednesday’s close.

Contel, a company with more than $3 billion in annual revenues, provides a wide range of telecommunications products and services. Recently, it bought $1.3-billion worth of cellular telephone properties from McCaw Communications.

GTE, based in Stamford, Conn., is one of the world’s largest telecommunications companies, with more than $20 billion in annual sales.

Contel, shaped by entrepreneur Charles Wohlsetter, its chairman, was built from a sleepy regional telephone company into a leading diversified communications concern with local telephone units in 30 states. The purchase of the McCaw units in three Southern states also made it a major player in the emerging cellular telephone market.

For GTE, the acquisition of Contel will expand its domestic telephone company base. The merger will also greatly expand its cellular business, which has been a key focus of its growth strategy. It had been downplaying its role in the domestic long-distance telephone market by selling much of its Sprint business.

A GTE/Contel hookup is likely to catch the attention of regulators, who will examine its effect on the local telephone industry.

Contel, the 10th-largest telephone company, has 2.4 million telephone customers in 30 states, while GTE operates in 31 states.