SBC PLANS TO PURCHASE AMERITECH FOR $57 BILLION; MERGER WOULD TAKE ABOUT A YEAR

Telephone giant SBC Communications Inc. will purchase Baby Bell rival Ameritech Corp. for $57 billion in a stock-swap deal to be the second-largest merger in corporate history.

The deal, announced Monday, would create a powerhouse communications company with operations in nearly every region of the country.

SBC chairman Edward E. Whitacre Jr. said the merger will enable SBC to expand telecommunications competition into 30 U.S. markets outside of its 13-state local region.

It will allow SBC to serve customers in the nation's top 50 markets, creating a company to rival AT&T Corp. and WorldCom Inc., which plans a $37 billion takeover of MCI.

SBC and Ameritech hope to complete the merger in a year, following approval the public utilities commissions in Ameritech's regions, other local regulators and the Federal Communications Commission.

The FCC had no immediate comment by midafternoon.

Gene Kimmelman, co-director of Consumer Union's Washington office, said his group would ask the FCC and the Department of Justice to block the merger, which he claims will lead to higher local phone rates and reduced competition.

The Justice Department will review the transaction for antitrust issues. Some European countries will review the merger.

It would be second only to the pending $82 billion merger of Travelers Group Inc. and Citicorp. The $47.7 billion merger of NationsBank Corp. and BankAmerica Corp. is third largest.

SBC-Ameritech, to be called SBC, would have 57 million phone lines, a third of the nation's total. By comparison, Bell Atlantic, with operations along the East Coast, has 41 million phone lines.

Ameritech serves millions of customers in 50 states and 40 countries, providing local and long-distance telephone, cellular, paging, security services, cable TV, and Internet services. It is one of the world's largest companies, with 73,000 employees, a million shareholders and nearly $28 billion in assets.

SBC is a global leader in the telecommunications industry, with nearly 34 million access lines and more than 5.6 million wireless customers in the United States. It has investments in telecommunications businesses in 10 countries.

Both companies serve Cape Girardeau and Southeast Missouri.

Ameitech announced last week it will close its Ameritech Communications retail center in Cape Girardeau, but that service is still available from four retail outlets.

Southwestern Bell has four retail stores in Cape Girardeau, including the company's retail center at 3363 Gordonville Road.

Under the Southwestern Bell, Pacific Bell, Nevada Bell and Cellular One brands, SBC offers a wide range of services with its more than 118,000 employees. It reported revenues of $25 billion last year, and it had a market value of $80 billion on March 31.

If approved, the takeover would leave four remaining Bells out of the seven created in the 1984 antitrust breakup of the original American Telephone & Telegraph Co.

In addition to SBC and Bell Atlantic, the others are U S West near Denver and BellSouth in Atlanta.

SBC would pay a premium over Ameritech's market value of $48.3 billion based on Friday's closing stock price of $43.875 a share.

Ameritech shareholders will receive an exchange rate of 1.316 SBC share for each share of Ameritech.

Whitacre said, "Given the size and significance of the transaction we expect close scrutiny but ultimate approval from regulatory authorities."

"The Telecommunications Act of 1996 helped open the door to a period of rapid change in the telecommunications," said Ameritech's chief executive officer Richard Notebaert. "This merger transforms us into a company that has the size, scope and incentive to make the promise of the act a reality. The new company will be in the best position to serve our customers in the evolving marketplace."

In the transaction, Whitacre would remain chairman and chief executive, and Notehaert would be chairman and chief executive officer of the Ameritech Division. SBC's directors would expand to include Notebaert and four Ameritech directors.

In a series of mergers and acquisitions since deregulation began in 1996, communications companies have scrambled to outgun the competition by getting bigger and offering a wider array of services.

SBC, formerly Southwestern Bell, has led the way. It bought San Francisco-based Pacific Telesis Group a year ago for $16.5 billion and is completing its $5 billion acquisition of Southern New England Telecommunications Corp. of Connecticut.

Until now, Notebaert has appeared determined to remain independent, avoiding the combination frenzy of other Bells while aggressively purchasing large stakes in European phone companies.

But analysts have said that Ameritech, based in Chicago, appeared a ripe takeover target because of its solid Midwestern business and what some called its failure to move aggressively to compete under the new era of deregulation.

The parent of phone companies in Illinois, Indiana, Michigan, Ohio and Wisconsin, Ameritech has other non-core businesses such as cable television and its home-security business.

Both Ameritech and SBC, like all Baby Bells, have sought to get into the $90 billion long-distance business. Ameritech has worked with state and federal regulators to break into the Michigan long-distance market.

SBC has taken another route, turning to the courts, to force regulators to allow it to move into Oklahoma and other states.

Some information for this report was provided by the Associated Press.