ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, April 22, 1996 TAG: 9604230060
SECTION: NATIONAL/INTERNATIONAL PAGE: A-5 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
Bell Atlantic Corp. and Nynex Corp. have agreed to merge in a deal that will create the nation's second-largest phone company, with customers from Maine to Virginia, sources say.
Nynex's board approved the deal Sunday, following the Bell Atlantic board's approval Saturday, said sources familiar with the deal who spoke on condition of anonymity. Spokesmen for both companies declined comment, but a formal announcement was expected today.
The merger would put the two companies in a position to confront increasing competition and enter new businesses from a bigger customer base. It could also be the second-biggest merger in U.S. history. Nynex's stock now is worth about $22.7 billion.
The deal will be a stock swap, but no other details were available. Bell Atlantic has a larger market value than Nynex, so its shareholders stand to own a bigger piece of the new company.
There was no word on whether job reductions would follow, though both companies are in the midst of major cost-cutting efforts.
Because they serve regions that are next to each other, Bell Atlantic and New York-based Nynex have opportunities to save money by combining staffs and facilities. Even labor unions that serve the two companies made their concerns known publicly.
RJR Nabisco Inc. and Kohlberg Kravis Roberts & Co. completed the biggest U.S. merger in 1989 at $25 billion.
The phone merger comes just three weeks after the first-ever combination of regional Baby Bell companies and follows by two months a sweeping deregulation of the telecommunication industry.
``There's a natural proclivity for those two Bells to get together,'' said Gary Miller, president of Aragon Consulting Group Inc., which specializes in telecommunications.
Bell Atlantic will be the name of the merged company.
As a single phone company, Bell Atlantic and Nynex will offer one-stop service to businesses that operate in both regions. For example, a Boston-based company with a branch in Pittsburgh must now deal with the two Baby Bells separately and a third company for long-distance service.
Such a powerhouse allows the emerging company to better withstand potential price competition as the communication industry reshapes. With long-distance companies such as AT&T able to enter the local phone business and with cable television companies looking to do the same, a combined Bell Atlantic and Nynex will be better able to keep up with price discounts in its most competitive markets.
In addition, the combined company will be a potent competitor for long-distance business in a region of the country that accounts for a third of the nation's long-distance volume.
``Critical mass will be very important for the Baby Bells,'' Miller said.
Consumers should expect to see little difference in local calling rates after the merger, but could see improved service as Bell Atlantic invests to upgrade Nynex's operations as it has its own.
A combined Bell Atlantic and Nynex will have 38 million phone lines in 13 states and the District of Columbia.
LENGTH: Medium: 64 linesby CNB