AT&T and TCI deal is scaring the arbitragers
Article Abstract:
AT&T's pending acquisition of cable giant Tele-Communications (TCI) has been affected by the recent stock market plunge. Arbitragers, the traders who specialize in takeover stocks, are skeptical of the deal. One problem is that AT&T's and TCI's stock value have declined almost 20% and 13% respectively since the deal valued at $31.8 billion was announced on Jun 24, 1998. Financial terms call for AT&T to exchange 0.7757 of its shares in return for each TCI share. The stock market fluctuation means that TCI shareholders now would receive $40.24 worth of AT&T stock for each share, compared to the initial $49.60 a share. Second, the difference between TCI's stock price and the deal's value has increased rather than narrowed. Third, some arbitragers are concerned that TCI Chmn John C. Malone may act on his tendency to renegotiate mergers. Malone's adjustments unraveled a proposed 1994 deal between TCI and Bell Atlantic.
Publication Name: The New York Times
Subject: Business, general
ISSN: 0362-4331
Year: 1998
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MCI will cut its write-off on acquisition
Article Abstract:
MCI Worldcom intends to write off $3.1 billion of Worldcom's acquisition of MCI as research and development costs, according to a filing with the SEC. The new amount represents a 50% reduction from company estimates in Aug 1998. One reason for the revision is the SEC's recent actions against technology companies that attempt to avoid long-term asset losses by hiking research-and-development costs, according to MCI Worldcom. This controversial tactic is common among sophisticated merger and acquisition bankers. Worldcom paid $37 billion to acquire MCI. America Online settled differences with the SEC on Sep 29, 1998, by reporting a $70.5 million research write-off from acquiring two companies. By comparison, AOL's initial write-off costs of $316 million prompted the SEC to withhold the release of company earnings since Aug 1998.
Publication Name: The New York Times
Subject: Business, general
ISSN: 0362-4331
Year: 1998
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Microsoft dealt setback as TCI chooses Java for cable box
Article Abstract:
Sun Microsystems said its Java programming language has been selected by cable TV operator Tele-Communications (TCI) to power digital set-top boxes. No financial terms were disclosed, but the deal weakened Microsoft's goal of dominating cable TV's next generation. Microsoft sought to provide both the OS and the application programming environment. The deal with Sun ensures that several companies will develop the new technology scheduled for release in 1999. Cable executives have strived to protect their medium from Microsoft's goal of combining computer, Internet and TV technologies. The cable TV industry currently reaches more than 65 million homes. Microsoft's best-case scenario would consist of winning the right to supply the OS, which still could prove lucrative.
Publication Name: The New York Times
Subject: Business, general
ISSN: 0362-4331
Year: 1998
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