Phone giant SBC Communications Inc. is buying Baby Bell rival Ameritech Corp. for $62 billion.
But the acquisition's long-term effect on the Provo-based Ameritech Library Services subsidiary is not yet clear.SBC and Ameritech Monday confirmed the stock-swap deal, which would be the second-largest merger in corporate history. It would create a powerhouse communications company with operations in nearly every region of the country, likely to serve as a potent rival to AT&T Corp., and to WorldCom Inc. after its pending $37 billion takeover of MCI Communications Corp.
Maureen Germano, the library services company's director of marketing services, said Monday that it provides computer automation systems for about 7,000 library customers in 40 countries. The company has about 500 Utah employees.
Paul Sybrowsky founded the company as Dynix Inc. in 1983. Ameritech Corp. bought Dynix in 1995 and merged it with NOTIS to create Ameritech Library Services.
About 100 of the company's Utah employees and 40 in other offices were laid off in 1996 as part of a realignment of resources.
"We've been considered critical to Ameritech's strategy as a telecommunications services provider," Germano said. "It's a broader strategy than just looking at local vs. long-distance telephone calls. It's really the whole worldwide information exchange that we support."
Germano referred further questions about the merger to Ameritech's corporate headquarters in Chicago.
Bill Pendergrast, Ameritech spokesman, said he could not speculate on the library services company's future after the merger. But he did say the companies do not plan to lay off any workers in the short term.
"Between now and the middle of 1999 (when the merger should be completed), it is business as usual, and Ameritech remains Ameritech on the same lines of business pursuing the same strategies for growth and success," Pendergrast said Monday.
He said the library services portion of Ameritech has been important to the company.
"It's been a wonderful fit and will continue to be a wonderful fit for us," Pendergrast said. "It's about the moving of information, and library services has been a wonderful opportunity for us to expand the definition of what it means to be a communications company."
The SBC-Ameritech combination would give the combined company, which will be known as SBC, 57 million phone lines, or almost one-third of the nation's total.
The combination would be second in size only to the pending $82 billion merger of Travelers Group Inc. and Citicorp.
If approved by shareholders and regulators, the takeover would leave just four remaining Bells out of the seven created in the 1984 antitrust breakup of the original American Telephone & Telegraph Co., which provided both local and long-distance phone service.
In addition to SBC and Bell Atlantic, the others are US WEST and BellSouth in Atlanta.
Gene Kimmelman, co-director of Consumer Union's Washington office, said the consumer group would ask the FCC and the Department of Justice to block the SBC-Ameritech merger. He said it probably would lead to higher local phone rates because of a lack of competition.
"This merger is extremely dangerous for consumers. It is the inevitable backslide toward monopoly and results from excessive deregulation and weak antitrust oversight," Kimmelman said.
In a series of mergers and acquisitions since deregulation began in 1996, communication companies have been scrambling to outgun the competition by getting bigger and offering a wider array of services, including cellular, local and long-distance phone service.
SBC Communications, formerly called Southwestern Bell, has led the way. It bought San Francisco-based Pacific Telesis Group a year ago for $16.5 billion and is working to complete its $5 billion acquisition of Southern New England Telecommunications Corp. of Connecticut.
"Merger mania might not be what the Telecom Act had in mind, but this is the path many local and long-distance companies are taking," said Atlanta-based telecommunications analyst Jeffrey Kagan. "And if telecom is shaping up to be a battle of titans, then Ameritech and SBC aren't going to be wallflowers."
SBC would be paying a premium over Ameritech's market value of $48.3 billion, based on Friday's closing stock price of $43.875 a share.
The Associated Press contributed to this report