SBC Communications is set to acquire AT&T in a deal worth US$16 billion, the deal will create the largest telecommunications carrier in the US.

Under terms of the agreement, shareholders of AT&T will receive 0.77942 shares of SBC common stock for each common share of AT&T, the statement said. Based on the Jan. 28 closing price of SBC's stock, this exchange ratio equals $18.41 per share. In addition, AT&T will pay its shareholders a special dividend of $1.30 per share, bringing the total consideration for each AT&T share to $19.71, and valuing the deal at around $16 billion, it said.

The acquisition, which is subject to approval by AT&T's shareholders and US regulatory authorities, is expected to close by the first half of 2006, the statement said.