Following on this post from last week, the boards of San Antonio-based SBC Communications Inc. and AT&T Corp. approved a mostly stock deal under which SBC will acquire AT&T for roughly $16 billion.
SBC’s board approved the transaction Sunday evening, while AT&T’s board approved it just before 1 a.m. Monday. The acquisition remains subject to approval by AT&T’s shareholders and regulatory authorities, and is expected to close by the first half of 2006.
The deal would create the nation’s largest telecommunications company. The merger will end AT&T’s 130-year remarkable run as an independent company, which began with the invention of the telephone.
Meanwhile, the Wall Street Journal ($)is reporting this morning that MetLife Inc. is close to striking a deal for Citigroup Inc.’s Travelers Life & Annuity Co. in a deal that would probably be valued at around $12 billion.
Consolidation within the life insurance industry has been predicted for some time, but the predicted consolidation has not taken place as quickly as many have predicted. If the MetLife-Travelers’ deal makes, that could trigger the predicted round of consolidation in the industry. The theory of the MetLife-Travelers’ deal is that insurance companies can generate better profit margins by serving larger numbers of customers with essentially the same back-office systems and only incrementally larger sales forces.
Both these deals signal that the markets are coming back to the type of big-scale merger deals that had largely disappeared from the business landscape over the past three years.