SBC Communications Inc. plans to acquire AT&T Corp. in a deal worth US$16 billion, the company said in a statement Monday. The deal will create the largest telecommunications carrier in the U.S.

"Today's agreement is a huge step forward in our efforts to build acompany that will lead an American communications revolution in the21st century," said SBC Chairman and Chief Executive Officer Edward Whitacre in the statement.

Whitacre will remain in his current position, while AT&TChairman and CEO David Dorman will become president of the mergedcompany, to be based in San Antonio, Texas, where SBC has headquarters.

Under terms of the agreement, shareholders of AT&T will receive0.77942 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 willpay its shareholders a special dividend of $1.30 per share, bringingthe total consideration for each AT&T share to $19.71, and valuingthe deal at around $16 billion, it said.

The acquisition, which is subject to approval by AT&T'sshareholders and U.S. regulatory authorities, is expected to close bythe first half of 2006, the statement said.