AT&T Corp. said it would issue 75 million shares to Cox Communications
Inc. and 80 million to Comcast Corp. as part of a revised agreement regarding
the two MSOs' stakes in Excite@Home Corp.
Cox and Comcast had the right to put their shares of Excite@Home to AT&T
for $48 apiece. In January, the two MSOs agreed to accept AT&T stock worth
about $2.9 billion for the put rights instead of cash. At the time, AT&T
agreed to issue some 134 million shares of its stock in exchange for around 60.4
million Excite@Home shares.
But in April, AT&T said it was renegotiating that agreement, which could
result in Cox and Comcast receiving more AT&T and Excite@Home shares.
With the latest agreement, both Comcast and Cox will retain their Excite@Home
stakes and receive stock worth about $3.4 billion. AT&T said it completed
the Cox transaction May 18 and it expects to complete the Comcast transaction in
'This offers AT&T financial benefits, specifically tax benefits,'
AT&T spokeswoman Eileen Connolly said.
According to sources, the difference between the two deals is that if
AT&T accepted Excite@Home shares, the entire transaction would be tax-free
to all parties involved. However, by not accepting Excite@Home shares, AT&T
gets to record a tax benefit of about $1.2 billion. Although Cox and Comcast
will have to pay taxes on the transaction, that should be mostly offset by the
additional AT&T stock.
As a result of the revised deal, Cox and Comcast will be counted among the 10
largest institutional shareholders of AT&T.