The Work

March 20, 2011 10:00 PM

S&C, Wachtell Lead on AT&T's $39 Billion T-Mobile USA Acquisition

Posted by Ed Shanahan

March madness wasn't confined to college basketball this weekend. In a surprising move, AT&T announced on Sunday that it will pay $39 billion to acquire T-Mobile USA from Deutsche Telekom.

The cash-and-stock deal, already approved by the boards of both companies, will create the largest cellular carrier in the U.S., The New York Times reports. AT&T has 95.5 million wireless subscribers; T-Mobile USA has 34 million subscribers, according to an announcement from the companies about the deal.

The acquisition will provide the parties with "an optimal combination of network assets to add capacity sooner than any alternative, and it provides an opportunity to improve network quality in the near term for both companies' customers," the companies said. "In addition, it provides a fast, efficient and certain solution to the impending exhaustion of wireless spectrum in some markets, which limits both companies' ability to meet the ongoing explosive demand for mobile broadband."

Sullivan & Cromwell is advising Dallas-based AT&T on the deal with a team led by New York M&A partner Joseph Frumkin and Los Angeles M&A partner Eric Krautheimer. Frankfurt corporate partner Wolfgang Feuring is handling German law matters. Los Angeles partner Hydee Feldstein is advising on financing. The team also includes New York tax partner Andrew Mason and New York benefits/executive compensation partner Matthew Friestedt.

As part of the deal, Deutsche Telekom, based in Bonn, Germany, will receive an equity stake in AT&T, the deal announcement noted, and a Deutsche Telekom representative will join the AT&T board of directors.

Deutsche Telekom has turned to Wachtell, Lipton, Rosen & Katz. The firm's team is led by corporate partners Adam Emmerich and Steven Cohen and includes associates Ross A. Fieldston, DongJu Song, and Valentina Cassata.

Initial reaction to the announced deal has focused on what the combination will mean for consumers--higher prices and fewer choices, the critics say--and for the regulators. There is one giant question mark hanging over the deal, The Wall Street Journal reports: "Will the U.S. government approve an acquisition that most experts thought was unthinkable until recently." The deal will "likely be of  particular concern to antitrust enforcers because the industry's two dominant companies--Verizon Wireless, a joint venture of Vodafone Group PLC and Verizon Communications Inc., and AT&T--are already so far ahead of anyone else, raising the specter of an effective duopoly in mobile telephony."

Regulatory counsel are likely to be very busy on the deal in the coming year--it is expected to close in "approximately 12 months," the companies' statement said. Should the deal not go through, AT&T has agreed to a $3 billion breakup fee.

Arnold & Porter and Crowell & Moring are providing regulatory advice to AT&T, the companies' statement said.

Cleary Gottlieb Steen & Hamilton and Wiley Rein are also advising Deutsche Telekom, according to the WSJ.

We'll have more on the legal advisers working on the deal on Monday

Click here for more details about the transaction.



AT&T - T-Mobile: By the Numbers

T-Mobile Deal Faces Antitrust Barriers
The Wall Street Journal

Consumer Groups: AT&T + T-Mobile is 'Unthinkable'
The Hill

AT&T to Buy T-Mobile USA for $39 Billion
The New York Times

Cellphone Reception Is Getting Worse
The New York Times



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