AT&T Inc. and BellSouth announced a US$67 billion merger deal Sunday. If approved by shareholders and regulators, the merger would create the largest telecommunications company in the United States, with control of over half of the telephone lines in the country and the largest cellular service provider, Cingular Wireless.
"This transaction combines two solid, very well-run companies," AT&T Chairman and CEO Edward E. Whitacre said in a press statement. "BellSouth operates in an attractive region with a growing economy. It has great employees and an outstanding network, with fiber optics deeply deployed in its service area. It has a strong record in terms of customer service and a sound, conservative balance sheet. These strengths, added to those of AT&T, will improve our ability to provide innovative services to more customers while returning substantial value to our owners and improving our growth profile."
AT&T and BellSouth had shared ownership and operations of Cingular Wireless, which will be absorbed by AT&T as part of the merger. If the deal passes shareholders, BellSouth stock holders will receive 1.325 shares of AT&T common stock for each single share held of BellSouth stock. at a rate of 1.325 shares of AT&T stock per BellSouth share.  Though subject to approval by government regulators and shareholders of both companies, the merger is expected to be completed within the next year.
BellSouth and AT&T employ nearly 316,000 people in the United States. The merger, if approved, would give AT&T 70 million telephone users, almost 10 million broadband subscribers, and AT&T will provide services to more than half the companies on the Fortune 100 in 22 states.
Whitacre will remain as chairman, CEO and a member of the board of directors of the combined company. Duane Ackerman, currently chairman and CEO of BellSouth, will remain in his position for a transition period following the merger. Additionally, three members of BellSouth's board of directors will join the AT&T board.
The announced purchase recalls the planned US$115 billion dollar merger of MCI WorldCom and Sprint in 1999 that was prohibited by the federal government. Despite this, analysts think the federal actions will be smaller, since these actions came under protest three months ago due to the actions of their European rivals.
With the price of AT&T closing at US$27.99 per share, and the price of BellSouth closing at US$37.09 per share, AT&T will pay an additional 17.9% for each stock of BellSouth. This operation ultimately leads to a capitalization of US$165 billion, and officials with the companies predict a force reduction of at least 10,000 employees, lower costs of operation in networks, and an overall savings of  $2 billion after the second year, with altogether savings reaching US$18 billion. 
AT&T also announced that it will try to acquire the US$10 billion worth of stocks that were yielded during the company's bankruptcy in 1984.
The corporate headquarters for the combined company are expected to remain in San Antonio, Texas, though Georgia Governor Sonny Perdue and Atlanta Mayor Shirley Franklin said Monday that they will work to persuade AT&T executives to move their headquarters to the BellSouth HQ in Atlanta. Cingular's headquarters will remain in Atlanta, as will the combined company's Southeast regional telephone company headquarters.
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AT&T to buy BellSouth for $67 billion