How much would you pay for a 41 percent stake in a company worth $2.9 billion?

Simple arithmetic would put the price at a little less than $1.2 billion, but that's not the answer. Not if you're media magnate John Malone and you're buying a big piece of Teligent Inc., the "fixed wireless" communications company based in Vienna.

Malone, one of the nation's savviest dealmakers, will end up paying about $957 million for the 21.4 million shares of Teligent he plans to acquire from Associated Group Inc. of Pittsburgh, Teligent's parent company, in a deal announced Tuesday.

Associated is the largest investor in Teligent, which provides telephone, data and Internet service to business users over a wireless radio network instead of the usual copper wires or fiber-optic cables.

In the transaction, Malone's company, Liberty Media Group Inc., will issue stock worth $770 million and assume $187 million in debt--ending up with Associated's shares in Teligent. That's a pretty good price for stock worth $1.18 billion, based on Teligent's $55-a-share closing price yesterday on the New York Stock Exchange. Teligent's stock is up $6 since the deal was announced and has more than doubled since the first of the year, when it was trading for $27.

In most case, such a big block would sell for more than the market price, but Malone got a discount of roughly 20 percent because he was able to sweeten the deal for Associated's shareholders. He came up with a way for them to avoid what Salomon Smith Barney calculates would have been $713 million in federal capital gains taxes on the profits they've made on Associated's stock in two other companies, AT&T Corp. and Liberty Media itself.

Malone prides himself on what he calls "tax-efficient" investing--deals that make money but don't generate the kind of profits upon which taxes must be paid.

In this case, the tax- saving arrangement is made possible by the family ties among Associated, Liberty and AT&T. Liberty and AT&T are corporate siblings as the result of a merger last year in which AT&T acquired the cable systems owned by TCI, a sister company of Liberty. After acquiring TCI, AT&T spun off its Liberty stake as a separate company with its own stock.

If the owners of Associated simply sold their company to Malone for cash, they would have had to pay taxes on their AT&T and Liberty stock profits.

Instead, Malone came up with this deal: Associated will give its AT&T stock back to AT&T, which will then issue an identical number of new AT&T shares to Associated's stockholders.

In the same fashion, Associated's Liberty stock will revert to Liberty, which will print new shares and give them to Associated's shareholders. Liberty stockholders will also get more shares to compensate them for Associated's stake in Teligent and several small companies that are part of the deal.

The transaction is designed to qualify as a tax-free stock swap, so Associated's stockholders won't owe taxes unless or until they sell the shares they get in the deal.

Obviously, avoiding a huge tax bill is worth something to those who control Associated. How much they think it is worth, neither they nor Malone will say. But the value of that savings accounts for what at first glance looks like the bargain price Liberty is getting for Teligent.

CAPTION: Teligent (This chart was not available)