AirTouch and U S WEST Media Group Announce New $5.7 Billion Plan to Merge U.S. Wireless Interests.SAN FRANCISCO--(BUSINESS WIRE)--Jan. 29, 1998-- AirTouch Expands Wireless Footprint and Increases U.S. Cellular U.S. Cellular (NYSE: USM) is a super-regional cellular telephone provider, serving 5.8 million customers in 189 markets in 26 U.S. states. The company was created in 1983 as a subsidiary of Telephone and Data Systems, Inc. Since April 2000, John E. Customer Base 50 Percent; U S WEST Media Group to Focus Resources on Core Broadband Strategy While Reducing Debt by About $1.4 Billion AirTouch Communications Inc. (NYSE NYSE See: New York Stock Exchange :ATI (ATI Technologies Inc., Markham Ontario, http://ati.amd.com) A leading manufacturer of graphics chips and display adapters. Founded in 1985 by K. Y. Ho, Benny Lau and Lee Lau, ATI chips and boards are widely used by OEMs. ) and U S WEST Media Group (NYSE:UMG UMG Universal Music Group UMG Universidad Mariano Gálvez de Guatemala (Mariano Galvez University of Guatemala) UMG Upgraded Metallurgical Grade (silicon) UMG Unlicensed Medical Graduate ) today announced a new definitive agreement to merge the U.S. cellular and PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. interests of U S WEST Media Group into AirTouch. U S WEST Media Group's international wireless interests are not included in this transaction. With this acquisition, AirTouch will rank as the second largest wireless provider in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , based on third quarter 1997 proportionate customers. The companies value the transaction at about $5.7 billion. U S WEST Media Group will receive approximately $1.6 billion in AirTouch dividend-bearing preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and about $2.7 billion in AirTouch common stock. Also, U S WEST Media Group will transfer approximately $1.4 billion of debt to AirTouch. Upon closing, AirTouch will own U S WEST Media Group's U.S. cellular property, U S WEST NewVector Group, and its interest in PCS provider PrimeCo Personal Communications, thereby increasing AirTouch's ownership interest in PrimeCo from approximately 25 to 50 percent. By bringing a tax-efficient close to a very successful partnership, the merger is an important strategic milestone for both companies, enhancing AirTouch's wireless scale and U S WEST Media Group's focus on broadband in the U.S. and abroad, and wireless internationally. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. AirTouch chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Sam Ginn, "With this acquisition, AirTouch casts a strong vote of confidence in our industry's future and reinforces our commitment to wireless. By adding the U.S. wireless interests of U S WEST Media Group, we'll significantly bolster our operating scale and expand our footprint. And we'll do so by taking on more debt and issuing preferred stock, thereby minimizing the number of shares of AirTouch common stock issued." "We are very pleased with this agreement. It provides great value for great properties. It allows for a streamlined, tax-efficient culmination of our partnership with AirTouch while allowing us to focus our resources on our core businesses. Our broadband strategy will benefit from reduced leverage, increased capital availability and enhanced management focus. In short, it's the right deal for both our shareowners and customers," said Chuck Lillis, president and CEO of U S WEST Media Group. As a result of the merger, AirTouch will add to its proportionate U.S. wireless portfolio 2.2 million cellular customers in 12 states and 62,000 PrimeCo customers, based on third quarter 1997 proportionate results. The company will expand its wireless footprint to cover 34 million more POPs. The change of ownership will be transparent to most NewVector customers. The two companies have been operating their U.S. cellular properties as part of a joint venture agreement since July 1994, and NewVector began using the AirTouch Cellular brand more than a year ago. In addition, NewVector employees will generally follow their work and become AirTouch employees once the transaction is final. According to the terms of the merger, the number of AirTouch common shares to be issued will vary depending on the trading price Trading price The price at which a security is currently selling. of AirTouch common stock during a 30-day period prior to closing. AirTouch will issue approximately 60.8 million shares to U S WEST Media Group if AirTouch stock is trading at $45 or higher, for a total deal value of $5.735 billion. If AirTouch is trading at $40 or lower, U S WEST Media Group will receive approximately 67.1 million AirTouch shares, for a total deal value of $5.685 billion. AirTouch's earnings per share dilution, primarily due to the amortization of acquisition intangibles, is expected to peak around $0.40 in 1999 and decline thereafter. The company plans to pursue cost savings to mitigate this dilution. The company does not expect a change in its investment grade credit ratings as a result of the transaction. Once consummated, the transaction will replace the 1994 multi-phased joint venture agreement. Closing of the merger, which is expected about the middle of this year, is subject to Hart-Scott-Rodino clearance and other approvals. Shareowner approvals are not required. AirTouch Communications is a global wireless communications company, with interests in cellular, paging, and personal communications services See PCS. in the United States, Belgium, Germany, India, Italy, Japan, Poland, Portugal, Romania, South Korea, Spain, and Sweden, as well as an interest in the Globalstar satellite system. The company, based in San Francisco, serves more than 10 million proportionate customers worldwide. U S WEST Media Group (NYSE:UMG), one of America's largest broadband communications companies, is involved in domestic and international cable and telephony, wireless communications, and directory and information services See Information Systems. . For 1996, the group had proportionate pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma revenue of $8.1 billion. U S WEST Media Group is one of two major groups owned by parent company U S WEST, Inc. The other major group is U S WEST Communications, which provides telecommunications services in 14 western and midwestern states. U S WEST has proposed splitting the two groups into separate public companies sometime after mid-1998, pending shareowner and other approvals. -0- "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Except for the historical information presented, the matters discussed in this release are forward-looking statements and are subject to risks and uncertainties that could cause actual results to differ materially. Such factors include: a change in economic conditions in the various markets served by AirTouch's operations which would adversely affect the level of demand for wireless services; greater-than-anticipated competitive activity requiring new pricing and/or product offerings or resulting in higher acquisition costs; greater-than-expected customer growth driving increased investment in network capacity; level of fraudulent activity; impact of new business opportunities requiring significant up-front investments; the timing of the combination of AirTouch's and U S WEST Media Group's cellular properties in the U.S.; impact on capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. from the deployment of new technologies; and that technologies will not perform according to expectations. These and other factors related to the business are described in the Company's 10-K under "Investment Considerations" and the quarterly reports on Form 10-Q Form 10-Q See 10-Q. . CONTACT: AirTouch Kathy Reinhart, 415-658-2042 Susan Rosenberg, 415-658-2209 or U S WEST Media Group Cathy Fowler, 303-793-6509 Steve Lang, 303-793-6290 |
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