DENVER -- AirTouch Communications Inc. today renewed a deal to buy the domestic mobile-phone business of U S West Inc., five months after the elimination of a federal tax loophole killed an earlier proposal.
AirTouch said it would pay $4.3 billion in common and preferred stock for the Baby Bell unit, more than it originally offered in stock. AirTouch officials said they were able to renew the deal in part because the value of the company's stock has nearly doubled since the initial proposal. In addition to stock, AirTouch is assuming $1.4 billion in U S West debt.
If finalized, the merger would make AirTouch Communications the second-largest mobile-phone company in the United States, after AT&T Corp. Denver-based U S West would focus on its local phone, cable and overseas wireless businesses.
In the current deal, AirTouch will sell its stock to U S West instead of its shareholders, who previously would have received the stock without paying taxes on it.
he agreement, subject to government approval, is expected to be completed by the summer.
This marks the third time the two companies have tried to blend U S West's cellular properties into San Francisco-based AirTouch.
In 1994, the two companies proposed a phased-in deal to combine their cellular properties.
Last spring, the companies announced a letter of intent to complete the merger under a special tax exemption. But that was scuttled when Congress decided the provision was a corporate loophole and closed it, which meant U S West would have to pay as much as $250 million in federal taxes.
S West officials asked lawmakers for an exemption, but that was denied in August.
While they continued to pursue a phased-in sale of U S West's mobile-phone business, the two companies decided to speed up the process again as AirTouch's stock rose.
Chuck Lillis, president and chief executive officer of U S West Media Group, said the merger would allow the company to concentrate on its core businesses.
Sam Ginn, AirTouch chairman and chief executive officer, said the merger would sharply increase the company's ability to sell mobile-phone service in the United States.
nder the merger, U S West Media Group, the unit involved in today's sale, would receive about $1.6 billion in preferred stock and about $2.7 billion in common stock. AirTouch would get about 2.2 cellular customers in 12 states, adding to its roughly 7 million U.S. and overseas mobile-phone subscribers.
It also would receive U S West's interest in PrimeCo Personal Communications, which is a combination of digital mobile phone and pager, boosting AirTouch's interest in the company to 50 percent.
If the current deal is scrapped, the two companies plan to revert to the initial phased-in approach agreed to in 1994.
U S West Media Group is one of two major groups owned by U S West Inc. U S West plans to divide its two groups into separate public companies later this year, pending shareowner and other approvals.