Case | HBS Case Collection | October 2003 (Revised October 2004)

AT&T Canada (A)

by Andre F. Perold and Kwame C. Van Leeuwen

Abstract

AT&T Canada (ATTC) is a merger arbitrage situation where AT&T Corp. has a contractual commitment to purchase the shares of ATTC at an escalating formula price. However, ATTC's business is performing poorly, and its bonds are trading at significant discounts to par. Subject to AT&T Corp. honoring its obligation, the shares of ATTC appear to be attractively priced. The case presents the situation from the perspective of a value investor who is trying to decide what positions to take in ATTC's shares and its bonds.

Keywords: Agreements and Arrangements; Valuation; Mergers and Acquisitions; Investment; Telecommunications Industry; Canada;

Citation:

Perold, Andre F., and Kwame C. Van Leeuwen. "AT&T Canada (A)." Harvard Business School Case 204-087, October 2003. (Revised October 2004.)