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Excite@Home stake kept
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May 18, 2001: 5:56 p.m. ET
Comcast, Cox retain devalued stake, get AT&T shares in tax-driven deal
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NEW YORK (CNNfn) - Cable operators Comcast Corp. and Cox Communications will hold onto their devalued stakes in high-speed Internet provider Excite@Home and still get even more shares of AT&T than they would have gotten under a stock swap originally arranged in March 2000.
AT&T had agreed at that time to buy the two cable company's 8 percent stakes in Excite for $48 in either cash or stock payable during the first five months of this year. But Excite@Home shares plunged in value between the agreement and the point in January when both agreed to take AT&T shares as payment.
AT&T said Friday the company would have had to pay 134 million shares of AT&T (T: Research, Estimates), worth about $2.96 billion based on Friday's closing price, for about 60.4 million shares of Excite@Home (ATHM: down $0.03 to $3.94, Research, Estimates) held by the two cable operators. That combined stake is worth just $238 million based on Friday's close.
Instead, AT&T said the two companies agreed to hold onto their Excite@Home shares while AT&T gives 75 million shares of its stock, worth $1.7 billion, to Cox (COX: Research, Estimates), and 80 million shares worth about 1.8 billion to Comcast (CMCSA: Research, Estimates).
The company's statement did not detail why it is giving more shares to Comcast, although the Cox deal closed Friday while the Comcast deal is set to close in June.
AT&T's statement said the new structure of the deal gives AT&T a substantial tax savings. That savings makes the new agreement a financial benefit for all three companies, it said.
AT&T said the new terms will not significantly affect its net income or earnings per share and that it would not change its guidance for the current quarter.
The telecom said it is still discussing a proposed restructuring of Excite@Home's backbone fiber agreement, and a joint initiative to maintain and improve current network performance levels. AT&T owns a 25 percent stake in Excite@Home, but controls about 74 percent of voting stock.
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Shares of Excite@Home gained $1.15, or nearly 30 percent, to $5.09 in after-hours trading following a loss of 3 cents in regular-hours trading. But after-hours trading did little to move the other stocks involved in the deal.
Shares of AT&T slipped 10 cents to $22 in after-hours trading after gaining 12 cents before the regular market close. Shares of Cox were unchanged in after-hours trades following a gain of 33 cents to $44.20 in regular-hours trading. Shares of Comcast were not trading after hours following a close of $43.81 which left it up 69 cents on the day. 
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