Updated from 1:46 p.m. ESTAT&T ( T) and BellSouth ( BLS) confirmed they're merging in a $67 billion deal. Their announcement Sunday afternoon followed media reports that AT&T was close to purchasing BellSouth in a transaction that would give it complete control over the two companies' Cingular wireless joint venture, which has become the largest U.S. wireless carrier. AT&T will exchange 1.325 shares of its common stock for each common share of BellSouth. Based on AT&T's Friday closing price of $27.99, that would equal a cash value of $37.09 for each BellSouth share, an 18% premium to BellSouth's $31.46 Friday closing price. The companies touted the benefits of having streamlined ownership and operations of Cingular. "The Cingular partnership and the company itself are performing extremely well, particularly after the AT&T Wireless acquisition," said AT&T Chairman and CEO Edward E. Whitacre. "But no partnership between two independent companies, no matter how well run, can match the speed, effectiveness, responsiveness and efficiency of a solely owned company." The companies also said they expect the deal to create $2 billion in annual benefits in 2008, growing to $3 billion a year in 2010. Both companies' boards have signed off on the merger, which is expected to close within 12 months and is subject to regulatory scrutiny. AT&T expects the acquisition to have a neutral impact on its adjusted EPS in 2007. After that, the impact will be positive on adjusted EPS, although the adjusted measure excludes all merger integration costs and the non-cash amortization of intangible assets. San Antonio-based AT&T also expects that the merger will reinforce the guidance it provided at its analyst conference at the end of January. There is no change to the company¿s 2006 outlook, and AT&T continues to expect double-digit adjusted EPS growth in each of the next three years, with significant growth in free cash flow after dividends. The merger should return AT&T¿s total revenue, including Cingular, to growth in 2007, a year earlier than previous guidance, according to the news release announcing the merger. AT&T also said its board had approved an expanded share repurchase plan of 400 million share through 2008, replacing the existing program. Under this authorization, the company expects to buy back at least $10 billion of its common shares over the next 22 months. At least $2 billion of the repurchases will come in 2006, consistent with AT&T¿s previous guidance. Mr. Whitacre will be chairman, CEO and a member of the board of directors of the combined company. Duane Ackerman, the chairman and CEO of BellSouth, will serve as chairman and CEO of BellSouth¿s operations for an unspecified transition period following the merger. Additionally, three members of BellSouth's board of directors will join the AT&T board. AT&T will keep the merged company's headquarters at its San Antonio offices, although Cingular¿s headquarters will remain in Atlanta, as will the company¿s Southeast regional telephone headquarters.