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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[x] Soliciting Material Pursuant to Rule 14a-12
BELLSOUTH CORPORATION
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
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[ ] Fee paid previously with preliminary materials:
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The following FAQS were used in announcing the proposed acquisition of
BellSouth by AT&T Inc. to the employees BellSouth employees.
EMPLOYEE FAQS RELATED TO THE BELLSOUTH-AT&T MERGER
WHY IS AT&T ACQUIRING BELLSOUTH?
Communications services are in a state of continuing change. In the past
few years, we have seen the value of consolidation as it has provided new
opportunities for growth and innovation. The merger of Cingular and AT&T
Wireless, for example, has resulted in customer growth, increased
investment and innovation of new products and services. We have also seen
tremendous progress with the convergence of wireline and wireless
technologies. We believe the merger of AT&T and BellSouth will result in
further progress and advances in communication services. The combined
company's strong financial position means the ability to invest in
next-generation products, services and technology. We will be better able
to meet customer demands and compete successfully.
This combination is good for shareholders. Our shareholders will receive a
17.9% premium over the closing price on March 3. In addition, after the
merger closes, we expect our shareholders to benefit from AT&T's higher
annual dividend. Based on the exchange ratio, AT&T's annual dividend of
$1.33 is the equivalent of $1.76 for each outstanding BellSouth share,
representing a 52% increase to BellSouth's current dividend.
It also provides our employees the opportunity to work for the most
respected telecommunications company in the U.S and one of the most
respected companies in the world. Both companies are known for their
customer service and network excellence. And both companies value diversity
and inclusion.
WHAT ARE THE TERMS OF THE DEAL?
BellSouth shareholders will receive 1.325 shares of AT&T common stock for
each BellSouth share that they hold. Based on AT&T's stock price at the
close of trading on March 3, 2006, this exchange ratio equals $37.08 per
share. The transaction is expected to be tax-free to BellSouth
shareholders.
AT&T ANNOUNCED THAT THE NET PRESENT VALUE OF EXPECTED SYNERGIES IS
ESTIMATED TO BE APPROXIMATELY $18 BILLION. WHERE WILL THE COST SAVINGS COME
FROM?
Almost all of the efficiencies are expected to come from reduced costs over
and above expected cost improvements from the ongoing productivity
initiatives of BellSouth, AT&T and Cingular.
o The largest savings are expected to come from backbone network
operations and IT, as facilities and operations are consolidated, and
from increased capital efficiencies.
o Substantial savings will come from eliminating duplicate corporate
functions.
o Additional savings will come from overlapping customer sales and
service operations.
WILL THE PENDING MERGER AFFECT BELLSOUTH'S COMPENSATION AND BENEFITS PRIOR
TO THE CLOSING, AND HOW SOON AFTER THE CLOSING MIGHT BENEFITS BE CHANGED?
The merger agreement does not require BellSouth to terminate or reduce any
of its overall benefits and compensation programs. BellSouth's benefits
plans and compensation programs in general will remain in effect and will
continue to be administered in accordance with their terms until closing
(although BellSouth continues to reserve the right to modify these programs
in any way and in accordance with the needs of the business). In other
words, the current compensation and benefits structures will continue
"business as usual" through the closing. After closing, all decisions
regarding benefits and compensation will be made by AT&T. However, under
the merger agreement, AT&T has agreed that, for a period of time after the
merger, BellSouth management employees will have compensation and benefit
plans and programs that are no less favorable in the aggregate than they
have at BellSouth. This commitment will continue for 12 months from the
closing or until Dec. 31, 2007, whichever is later. Eventually, BellSouth
employees will migrate to the benefit plans and programs of the AT&T
companies.
BellSouth's 2005 bonus payments and CAD increases will proceed as planned,
on schedule and unchanged as a result of this agreement. Bonuses will be
paid on March 15. Management salary increases will be effective May 1.
Bonuses for 2006 will be paid as earned in March 2007.
HOW DOES THE PENDING MERGER IMPACT THE VOLUNTARY OFFERS THAT ARE CURRENTLY
OUTSTANDING?
The terms of the current voluntary management severance offer were not
changed by the merger agreement. Regarding the current offer, we are
reviewing what modifications, if any, should be made to that process in
light of this merger announcement. Further information will be made
available in the next few days.
WILL THERE BE JOB CONSOLIDATION AFTER THE CLOSING OCCURS?
It is anticipated that the majority of BellSouth positions will be
unaffected by the merger. However, headquarters staff, support functions
and overlapping operations will be consolidated.
WILL THERE BE A SEVERANCE PACKAGE OFFERED TO EMPLOYEES WHO LEAVE THE
COMBINED COMPANY?
Employees who leave the combined company under certain circumstances will
be provided benefits under a separation plan. The severance plan will be
maintained for two years after closing for employees who separate after
closing and who separate for reasons other than for cause (as defined under
the enhanced separation plan). The general terms of the enhanced separation
plan will be (1) a severance pay formula equal to 7% of base pay per year
of service (minimum of 50% and maximum of 150%), (2) a pro-rated bonus
payment, (3) rule of 65 for retiree medical (and 6 months paid COBRA for
others), (4) rule of 65 for telephone concession, and (5) outplacement
services.
WHAT HAPPENS TO ANY BELLSOUTH STOCK OPTIONS, RESTRICTED SHARES AND
RESTRICTED STOCK UNITS?
At the time the merger closes, unvested and outstanding BellSouth stock
options will become fully vested and exercisable as provided in the award
agreements. Also, as of closing, each of your outstanding options to
purchase BellSouth common stock will be converted (at the exchange ratio)
into an option to purchase shares of AT&T common stock on similar terms.
BellSouth restricted shares and restricted stock units will be converted
into AT&T restricted shares and restricted stock units based on the
exchange ratio.
WHAT HAPPENS TO ANY BELLSOUTH PERFORMANCE SHARES?
After the merger closes, all performance shares will pay out pro-rata based
on actual performance through the date of closing. Payment of performance
shares will occur as soon as administratively feasible following the date
of closing. AT&T will grant replacement performance shares in an amount
approximately equal in value to the forfeited performance shares.
WHAT HAPPENS TO MY 401(k) PLAN?
The 401(k) plans will not change as a result of the merger agreement, and
your account will continue to be invested according to your investment
direction. However, following the closing, the BellSouth stock fund in each
401(k) plan will exchange its holdings of BellSouth common stock for AT&T
common stock in accordance with the 1.325 exchange ratio set forth in the
merger agreement. Any decisions regarding the 401(k) plans after the merger
closes will be made by AT&T.
WILL THE PENDING MERGER AFFECT BENEFITS FOR EMPLOYEES COVERED UNDER THE
COLLECTIVE BARGAINING AGREEMENTS?
No, the terms of the current bargaining agreements will remain in effect.
ARE BELLSOUTH'S PENSIONS/CASH BALANCE ACCOUNTS SECURE? WILL THE PLANS
CHANGE PRIOR TO THE CLOSE BECAUSE OF THE MERGER ANNOUNCEMENT? WILL THE
BELLSOUTH PENSION PLANS CONTINUE AFTER THE MERGER?
The BellSouth pension plans will not change as a result of the merger
agreement. Individuals currently receiving pensions can be confident that
there will be no disruption in receiving their monthly pension annuities
from BellSouth and following the merger with AT&T, in accordance with the
terms of BellSouth's pension plans. You should be aware that under law,
companies cannot reduce or eliminate a person's accrued and vested pension
benefit under tax-qualified plans, such as BellSouth's. In addition,
BellSouth's pension plans remain well-funded. Any decisions regarding the
pension plans after the merger closes will be made by AT&T.
WILL MY YEARS OF BELLSOUTH SERVICE BE RECOGNIZED BY AT&T?
Yes, BellSouth service will be recognized by AT&T after the closing occurs.
MERGER APPROVAL PROCESS
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WHAT APPROVALS WILL BE REQUIRED?
Approvals are required from BellSouth's and AT&T's shareholders, the FCC,
the U.S. Department of Justice, various state regulatory agencies and a
small number of local and foreign authorities.
HOW LONG DO YOU ANTICIPATE REGULATORY APPROVAL WILL TAKE?
We expect the regulatory approval process to take up to 12 months.
HEADQUARTERS
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WHERE WILL THE NEW COMPANY HEADQUARTERS BE LOCATED?
The combined company will be headquartered in San Antonio, Texas, but will
maintain a Southeast regional headquarters in Atlanta, Ga.
WHAT WILL HAPPEN TO THE HEADQUARTERS OF OTHER OPERATIONS (SUCH AS CINGULAR)?
Cingular's headquarters will remain in Atlanta. Also, the state
headquarters for each state in BellSouth's current nine-state region will
continue to operate as state headquarters for the combined company. At this
point, there has been no decision regarding the location of the
headquarters for BellSouth's Advertising and Publishing business.
OTHER
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SHOULD I CONTACT MY COUNTERPART IN AT&T TO BEGIN THE MERGER TRANSITION?
No, you should not contact your counterpart at AT&T to discuss post-merger
integration. Please remember that we are still separate companies and must
continue to operate separately until the closing. We will provide further
information on this in the near future.
CAN I TALK TO ANY OF MY FRIENDS OR CONTACTS AT AT&T?
You may continue to have personal conversations with AT&T employees or
conversations that are part of your day-to-day responsibilities at
BellSouth. However, you should not discuss post-merger integration.
WHERE CAN I LEARN MORE ABOUT THE MERGER?
We'll be communicating more information in the weeks and months ahead.
Watch for an employee intranet Web site devoted to the merger. We will also
set up a mailbox where you can send questions about the merger.
We have included or incorporated by reference in this document
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are subject to risks and
uncertainties, and actual results might differ materially from these
statements. Such statements include, but are not limited to, statements
about the benefits of the merger, including future financial and operating
results, the combined company's plans, objectives, expectations and
intentions, and other statements that are not historical facts. Such
statements are based upon the current beliefs and expectations of the
management of AT&T Inc. and BellSouth Corporation and are subject to
significant risks and uncertainties and outside of our control.
The following factors, among others, could cause actual results to differ
from those described in the forward-looking statements in this document:
the ability to obtain governmental approvals of the merger on the proposed
terms and schedule; the failure of AT&T shareholders to approve the
issuance of AT&T common shares or the failure of BellSouth shareholders to
approve the merger; the risk that the businesses of AT&T and BellSouth will
not be integrated successfully or as quickly as expected; the risk that the
cost savings and any other synergies from the merger, including any savings
and other synergies relating to the resulting sole ownership of Cingular
Wireless LLC may not be fully realized or may take longer to realize than
expected; disruption from the merger making it more difficult to maintain
relationships with customers, employees or suppliers; and competition and
its effect on pricing, spending, third-party relationships and revenues.
Additional factors that may affect future results are contained in AT&T's,
BellSouth's, and Cingular Wireless LLC's filings with the Securities and
Exchange Commission ("SEC"), which are available at the SEC's Web site
(http://www.sec.gov). Neither AT&T nor BellSouth is under any obligation,
and each expressly disclaim any obligation, to update, alter or otherwise
revise any forward-looking statement, whether written or oral, that may be
made from time to time, whether as a result of new information, future
events or otherwise.
NOTE: IN CONNECTION WITH THE PROPOSED MERGER, AT&T INTENDS TO FILE A
REGISTRATION STATEMENT ON FORM S-4, INCLUDING A JOINT PROXY STATEMENT OF
AT&T AND BELLSOUTH, AND AT&T AND BELLSOUTH WILL FILE OTHER MATERIALS WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). INVESTORS ARE URGED TO
READ THE REGISTRATION STATEMENT, INCLUDING THE JOINT PROXY STATEMENT (AND
ALL AMENDMENTS AND SUPPLEMENTS TO IT) AND OTHER MATERIALS WHEN THEY BECOME
AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors will be
able to obtain free copies of the registration and joint proxy statement,
when they become available, as well as other filings containing
information about AT&T and BellSouth, without charge, at the SEC's Web site
(www.sec.gov). Copies of AT&T's filings may also be obtained for free from
AT&T at AT&T's Web site (www.att.com) or by directing a request to AT&T
Inc. Stockholder Services, 175 E. Houston, San Antonio, Texas 78258. Copies
of BellSouth's filings may be obtained without charge from BellSouth at
BellSouth's Web site (www.bellsouth.com) or by directing a request to
BellSouth at Investor Relations, 1155 Peachtree Street, Atlanta, Georgia
30309.
AT&T, BellSouth and their respective directors and executive officers and
other members of management and employees are potential participants in the
solicitation of proxies in respect of the proposed merger. Information
regarding AT&T's directors and executive officers is available in AT&T's
2005 Annual Report on Form 10-K filed with the SEC on March 1, 2006 and
AT&T's preliminary proxy statement for its 2006 annual meeting of
stockholders, filed with the SEC on February 10, 2006, and information
regarding BellSouth's directors and executive officers is available in
BellSouth's 2005 Annual Report on Form 10-K filed with the SEC on February
28, 2006 and BellSouth's proxy statement for its 2006 annual meeting of
shareholders, filed with the SEC on March 3, 2006. Additional information
regarding the interests of such potential participants will be included in
the registration and joint proxy statement, and the other relevant
documents filed with the SEC when they become available.