UK's Vodafone gets Airtouch for $US56 billion

Vodafone Group and Airtouch Communications announced late Friday that they have reached an agreement to merge and form the world's largest wireless telecommunications company with a combined market capitalisation of about $US110 billion.

The cash-and-stock transaction, worth about $US56 billion, ends a bidding war between the UK's Vodafone and US telecomm heavyweight Bell Atlantic for the San Francisco-based Airtouch. Early on Friday Bell Atlantic walked away from merger discussions with AirTouch; it had offered $45 billion in stock for the company.

In a joint statement, the companies said that the merged entity, to be known as Vodafone AirTouch, will serve over 23 million cellular and PCS customers in 23 countries on four continents, becoming the world's largest wireless company.

The definitive agreement approved by each company's board of directors will give AirTouch stockholders five Vodafone ordinary shares (equivalent to 0.5 Vodafone American Depository Receipt), plus $9 in cash for each share of AirTouch common stock held at closing, subject to rebalancing between stock and cash under certain circumstances, according to the statement. The merger consideration is valued at $97 per AirTouch common share based on the January 15, 1999, Vodafone closing price of $176, the statement said.

The merger is expected to close in the second half of this year, subject to the approval of the stockholders of each company and government and regulatory authorities.

Vodafone chief executive Chris Gent will be chief executive officer of the new company and AirTouch chairman and CEO Sam Ginn will become non-executive chairman. Each company will appoint half of the merged company's 14 board members, and will be represented on the management team. Corporate headquarters will be in Newbury, England, while the headquarters for US and Asia-Pacific operations will be in San Francisco.

Vodafone owns interests in mobile operations in the UK, Australia, Egypt, France, Germany, Greece, Malta, Netherlands, New Zealand, Fiji, South Africa, Sweden, and Uganda. Meanwhile, AirTouch owns interests in cellular, paging, and personal communications services in the US, Belgium, Egypt, Germany, India, Italy, Japan, Poland, Portugal, Romania, South Korea, Spain, and Sweden. Both companies own interests in the Globalstar satellite system.

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