Right after sitting down with my NYT and seeing that Vodaphone is the leading contender, I get an email which says that Cingular is the winner…
Cingular raised its informal offer for AT&T Wireless (AWE: news, chart, profile) by as much as 36 percent as it battled Britain’s Vodafone Group (VOD: news, chart, profile) through the weekend.
The deal, which Cingular expects to close this year pending shareholder and regulator approvals, will shrink the number of competitors in the U.S. mobile market to five from six.
Cingular will become the leading operator with 46 million customers and coverage in 97 of the top 100 markets. It expects to generate savings of more than $1 billion in operating and capital spending in 2006.
Still the price tag, a 27 premium for AT&T Wireless shares as of Friday’s close, drew gasps in London. On Friday, analysts and observers had been predicting bids around $12 a share, up from Cingular’s first indicative bid at $11 – a move that set off the auction.
“At $15 dollars a share, it shows you just how excited the bidding got,” said Morten Singleton, an industry analyst at Williams de Broe in London.
VOD shares surged 6 percent in London. AT&T Wireless surged $2.08 to $13.90. SBC was down 55 cents at $24.50 in light pre-open trade. BLS shares were not yet active, dealers said.
The deal values AT&TW at 9.9 times its underlying earnings in 2005, which is currently higher than what the market has valued each of AT&TW’s European peers.
Vodafone, the largest in Europe, is valued around 5 times underlying earnings, Christian Maher, analyst at Investec Securities in London said. [CBS Marketwatch]