AT&T to lose
300,000 shareholders in reverse split
When AT&T completes the sale of its AT&T Broadband cable television unit to Comcast (NasdaqNM:CMCSK - News) it will conduct a one-for-five reverse split of its common stock. That will boost AT&T's stock price by cutting the number of common shares outstanding. AT&T currently has about 3.85 billion shares outstanding.
Shareowners will get one share for each five shares of AT&T they own. The overall value of their investment will not change even though the price of AT&T's stock will increase. It is the equivalent of getting one $50 bill in exchange for five $10 bills.
Investors with fewer than five shares of AT&T stock will get cash in lieu of stock. As a result, about 300,000 investors will get a check in the mail and no longer be shareholders of the No. 1 U.S. long-distance telephone company, AT&T said.
AT&T, one of the most widely held U.S. stocks, has about 3.4 million shareholders. The company declined to comment on the money it will save from having fewer shareholders.
The exact amount of shareholders getting cash will be determined on the "record date" for the broadband spinoff.
AT&T said on Thursday it would spin off its broadband unit, with a special dividend to shareholders, on Nov. 18.
Immediately following that, AT&T Broadband will combine with Comcast and the shareholders of both AT&T Broadband and Comcast will become shareholders of the new company, with AT&T shareholders owning about 56 percent.
The new company will be named "Comcast Corporation," not "AT&T Comcast" as previously announced, to avoid market confusion, AT&T said.
AT&T named the five current AT&T directors who will move to the new Comcast board: C. Michael Armstrong, retiring AT&T chairman and chief executive, who will be chairman of the Comcast board; J. Michael Cook, retired chief executive of Deloitte & Touche LLP; George M.C. Fisher, retired chief executive of Eastman Kodak Co.; Louis Simpson, president and chief executive of capital operations at GEICO Corp.; and Michael I. Sovern, chairman of Sotheby's Holdings Inc. and president emeritus and chancellor of Kent Professor of Law at Columbia University.
After the cable spinoff, AT&T's remaining operations will provide voice and data services to about 4 million corporate customers and 60 million residential customers. The sale of AT&T Broadband ends AT&T's efforts to create a one-stop shop for telephone, data, wireless and entertainment services.