US telecom company SBC Communications is to buy AT&T for about $16 billion as it aims to bolster its services for large corporations.
SBC's acquisition of AT&T, the biggest long-distance carrier in the US, will include $14.7 billion in SBC stock and a special dividend of roughly $1.04 billion to be paid by AT&T to its shareholders when the deal closes.
The combined company would have around $71 billion in revenues, the same as top US telecom Verizon Communications. A merger would likely face antitrust hurdles, however.
The deal, which is expected to close by the first half of 2006, has also drawn criticism from analysts, who said $16 billion was too expensive for a company that has shrinking revenues and questionable growth prospects.
AT&T shares closed on Friday at $19.71, up 11 cents. SBC closed down 0.2 per cent at $23.62, valuing the company at $78 billion.