SBC Communications → Ameritech
SBC's $62bn all-share takeover of Ameritech, agreed in May 1998, put three of the seven regional Bell companies created by the 1984 break-up of AT&T under one owner — the step that took the smallest "Baby Bell" towards buying AT&T itself and taking its name.
One of the reassemblies of the former Bell System that eventually became AT&T again.
- Value
- $62B
- Announced
- May 1998
- Completed
- October 1999
- Sector
- Telecom
- Deal type
- acquisition
- Acquirer
- SBC Communications (United States)
- Target
- Ameritech (United States)
Why it mattered
Two years after the Telecommunications Act of 1996 set out to open local telephone markets to competition, the regional Bells were consolidating instead. SBC, based in San Antonio, had bought Pacific Telesis in 1997 and agreed in January 1998 to buy Southern New England Telecommunications for $4.4bn. Ameritech, based in Chicago, served Illinois, Indiana, Michigan, Ohio and Wisconsin. Under the terms announced on 11 May 1998 each Ameritech share became 1.316 SBC shares, leaving SBC's holders with about 56% of a group valued at $146bn. SBC promised to keep Ameritech's Chicago headquarters and its name, and to enter 30 markets outside its region, reaching all 50 of the largest US markets.
Consumers Union said it would ask the Justice Department to block the deal, and the FCC chairman, William Kennard, asked whether it would create competition or be "a non-aggression pact". Approval took 17 months. Overlapping mobile licences had to go — Ameritech's Chicago cellular business was sold to GTE — and on 6 October 1999 the FCC approved the merger subject to 30 conditions, among them discounts for rivals leasing SBC's lines and entry into at least 30 major markets outside its region within 30 months, backed by incentive payments of nearly $1.2bn. The deal closed on 8 October 1999, by then valued at $81.1bn, giving the combined company about a third of US local telephone lines.
What it left behind
The promises about Ameritech's identity were short-lived. Richard Notebaert, its chief executive, announced his departure less than a week after the FCC's approval and in 2002 became chief executive of the rival Qwest; in December 2002 SBC dropped all its regional brands, Ameritech included, for a single SBC name. SBC ran its mobile business with BellSouth's as Cingular Wireless, bought its former parent AT&T Corporation for $16bn in 2005 and adopted the AT&T name, and in 2006 bought BellSouth, reuniting four of the seven Baby Bells. Ameritech survives as AT&T Teleholdings, trading as AT&T Midwest. Undertakings on names, headquarters and new markets help a merger through its approvals but rarely outlive the integration; the footprint is what endures.