SBC Raising Bid on Prodigy?

SBC held a 41 percent stake in Prodigy, with full ownership the former Baby Bell has a vested interest in keeping the ISP afloat.

by Thor Olavsrud of internetnews.com [October 16, 2001]

[October 19, 2001 Update] SBC Communications Inc. Thursday sealed a deal to acquire the remaining 70.5 million shares of Prodigy Communications Corp. it does not already own. The Regional Bell Operating Company (RBOC) will pay $6.60 a share, a total of about $465.3 million, for the Class A common stock shares. SBC originally bid $5.45 a share ($348 million) for the company on Oct. 2. But a number of Prodigy shareholders raised objections, saying the unsolicited bid was too low. Prodigy shares were trading at about $6.20 at the time.

SBC Communications (NYSE:SBC) Monday entered into talks with a special committee of Prodigy to discuss the possibility of raising its bid to acquire the ISP.

On Oct. 2, SBC offered $384 million, or $5.45 a share, for about 70.5 million shares of Prodigy Class A Common Stock, or 58 percent of the company. SBC already owns 42 percent of Prodigy (NASDAQ:PRGY). A number of Prodigy's shareholders said the unsolicited offer was too low, noting that the offer was below Prodigy's current price of about $6.20 a share.

SBC said the special committee has informally suggested a tender price of $6.55.

The telco said it is considering raising its bid to the $6 per share to $6.25 per share ($440.6 million) range.

Prodigy has said its special committee will advise its shareholders whether or not to accept the offer by October 16th.

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