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AT&T rejects Comcast bid

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NEW YORK (AP) — AT&T Corp.'s board of directors unanimously rejected a $40 billion takeover bid for its cable TV business from Comcast Corp.

A statement by AT&T Wednesday said "Comcast's proposal did not reflect the full value of AT&T Broadband," the name of the huge cable operation AT&T built in recent years through pricey acquisitions that left a mountain of debt.

At the same time, AT&T said it has decided to delay spinning off the cable division as an independent company.

Comcast quickly responded with its own statement, arguing that investors have bid AT&T's stock higher to show approval for the offer, but welcoming AT&T's decision to consider alternatives to the breakup plan.

"We disagree with the AT&T board's characterization of our offer as inadequate. Since our announcement, AT&T shareholders have responded to our proposal by adding over $14 billion in market valuation to AT&T," Brian L. Roberts, president of Comcast, said in a statement.

"We are surprised that AT&T's board has yet to ask us for any further information. To that end, we remain prepared to hold immediate discussions with AT&T regarding our proposal."

While it's unclear whether AT&T will agree to sell the business, analysts had expected management to posture for a higher bid that might demonstrate the value of its cable business.

"This gives a little breathing room to everybody," said Tom Wolzien, an industry analyst with Sanford C. Bernstein & Co. "I thought it was fairly positive that they said they weren't going to go ahead immediately with their spinoff plan."

The unorthodox public bid to pressure AT&T into selling the nation's biggest cable company was launched last week by No. 3 Comcast after talks with AT&T management failed to produce an accord.

In rejecting the unsolicited offer, AT&T left the door open for a higher bid from Comcast or another party, a notable departure from the company's initial resolve to proceed with the breakup.