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AT&T Wireless to set up guidelines for bidders

AT&T Wireless, facing a flood of interest from suitors, has decided to set up a formal process to collect and review bids, sources familiar with the situation said on Wednesday.
/ Source: Reuters

No. 3 U.S. wireless telephone company, AT&T Wireless Services Inc., facing a flood of interest from suitors, has decided to set up a formal process to collect and review bids, sources familiar with the situation said on Wednesday.

Over the next few days, advisors for AT&T Wireless will outline guidelines for potential buyers to review the wireless company's proprietary financial information and set deadlines for bids, the sources said.

AT&T Wireless will be advised by Merrill Lynch & Co. Inc. and law firm Wachtell, Lipton, Rosen & Katz as it weighs takeover offers that could exceed its current market capitalization of $29.6 billion.

Carriers ranging from Cingular Wireless, the No. 2 U.S. wireless company, to Japan's NTT Docomo Inc., which already owns a 16 percent of AT&T Wireless, have expressed interest in submitting offers, sources have said.

Others include Nextel Communications Inc., Britain's Vodafone Group Plc and Germany's Deutsche Telekom AG, according to those familiar with the situation. Deutsche Telekom has weighed an offer but is unlikely to move forward with any substantive talks, these people said.

Setting a formal auction process begins the first serious consideration of a major merger in the crowded U.S. wireless industry, which has suffered from intense competition and slowing subscriber growth, since about half of the country already owns wireless phones.

Several wireless carriers have held off-and-on merger talks over the past two years, but those conversations never developed beyond preliminary flirting.

By establishing procedures to review bids, all suitors would be able to submit offers simultaneously and receive due consideration by AT&T Wireless's board.

It was not clear whether AT&T Wireless would hold more than one round of bidding to whittle the list of casual suitors to a smaller group of serious bidders.

Cingular, a joint venture of regional telephone companies SBC Communications Inc. and BellSouth Corp., has outlined an all-cash proposal to AT&T Wireless officials but has not submitted an offer in writing, sources have said.

"While other names such as NTT DoCoMo, Vodafone and Nextel have been mentioned, a Cingular/AWE combination makes the most sense, in our view," said UBS analyst Colette Fleming, referring to AT&T Wireless by its stock symbol "AWE."

Together, Cingular and AT&T Wireless would have about 45 million customers, topping current market leader Verizon Wireless, which had about 36 million customers at the end of the third quarter. Verizon Wireless is a joint venture of Verizon Communications Inc. and Britain's Vodafone.

Cingular has the backing of its two parent companies to make an all-cash bid, sources said. SBC and BellSouth each have massive war chests of cash and could easily raise money in the debt markets, analysts said.

AT&T Wireless and Cingular declined to comment. Vodafone, NTT Docomo, and Nextel have declined to comment or could not be immediately reached for comment on Wednesday, but previously have declined comment on the ongoing merger speculation.