Terms Likely to Put Bell Atlantic in Control
If the relative stock market valuations in the Nynex-Bell Atlantic proposed merger are seen as fair when trading begins today, Bell Atlantic shareholders will control 54.5% of the combined company.
The relative value of Nynex Corp. and Bell Atlantic Corp. were a sticking point in merger talks between the two companies since late last year, according to sources.
Although no financial details were immediately available about the merger over the weekend, if the companies follow Friday’s closing prices, Bell Atlantic would be worth $28.5 billion, at $65 per share, and Nynex $23.7 billion at $53 a share.
The merged company will have a market value in excess of $52 billion--much bigger than either MCI Communications Corp. or Sprint Corp. and somewhat larger than the combined $46.5-billion value of SBC Communications Corp. and Pacific Telesis Group, which agreed to merge early this month.
However, AT&T; Corp. would remain by far the largest U.S. telecommunications firm, worth $75 billion to $80 billion even after computing and equipment-making units are spun off this year.
The new Bell Atlantic would be a dominating force in local telecommunications in the northeast of the United States, reaching from Maine to Virginia, and serving millions of urban residents.
The deal would be effected by a tax-free pooling of interests, sources said. This would mean a new company being formed to offer its shares to stockholders of each company.
Analysts say the pooling method means shareholders would be unlikely to see a big premium to current prices, the way shareholders did when SBC offered a 40% premium for Pacific Telesis.
Nynex has $9.8 billion of long- and short-term debt; Bell Atlantic has $7.8 billion.
The two companies are well-placed in several key markets.
Since the telecommunications reform law of February, the two are free to enter the long-distance telephone market, and they are expected to form a joint venture to do so, the sources said.
“We do not know precisely what the business plan for international and domestic long-distance is. That is where the incremental sizzle in this story is,” said Bill Vogel, an industry analyst at Dillon Read.
They already have a fast-growing cellular telephone venture, Bell Atlantic Nynex Mobile, and are partners in a Personal Communications Services (PCS) digital wireless venture called PCS PrimeCo together with AirTouch Communications and US West Inc.
The sources said the two companies hope to exert a global influence, particularly in Asia, where Nynex has a 13.5% stake in TelecomAsia of Bangkok and Bell Atlantic has a 24.8% stake in Telecom Corp. of New Zealand.
