AT&T agrees to buy DirecTV in $48.5BN deal

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AT&T agrees to buy DirecTV in $48.5BN deal
Details
Michelle Clancy
| 19 May 2014
US communications company AT&T has at last agreed to buy No 2 US pay-TV operator DirecTV for about $48.5 billion, adding to the consolidation frenzy that's shaping up in the country.

The boards of both companies approved the merger on Sunday (18 May), with AT&T agreeing to pay the satellite leader's shareholders $95 per share – $28.50 per share in cash and $66.50 per share worth in AT&T stock. Including DirecTV's debt, the total value of the transaction is actually about $67.1 billion.

Shareholders will receive 1.905 AT&T shares if AT&T stock price is below $34.90 at closing, or 1.724 AT&T shares if its stock price is above $38.58. If AT&T's stock price at closing is between $34.90 and $38.58, DirecTV shareholders will receive between 1.724 and 1.905 shares of AT&T stock, equal to $66.50 in value.

"This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens," said Randall Stephenson, AT&T's chairman and CEO, in a statement on Sunday.

The acquisition surprised some who expected the telco to quest instead after DISH Network, which holds valuable nationwide spectrum that AT&T can use to further its LTE ambitions. But the DirecTV seems to be all about the triple-play, giving AT&T a nationwide video install base to which it can sell broadband, a service DirecTV doesn't have. And, it expands its video presence significantly from existing U-verse IPTV markets. In short, AT&T will have more flexibility in bundling services.

AT&T has about 5.7 million video customers in 22 states. DirecTV has about 20 million customers nationwide and is the second-largest pay-TV provider behind Comcast. It also has 18 million customers in Latin America, a region AT&T has no existing business in.

If approved by regulators, DirecTV will operate as AT&T's subsidiary and continue to be based in its current headquarters in El Segundo, Calif.

The announcement comes as Comcast attempts to win approval to buy No 2 cable MSO Time Warner Cable for about $45 billion. Conventional wisdom holds that if the Department of Justice and other regulators say yes to Comcast then it will be forced to also say yes to AT&T.

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AT&T to buy DIRECTV

May 19, 2014 06.57 Europe/London By Chris Dziadul


DirectTVAT&T has entered into an agreement to buy DIRECTV for $48.5 billion (€35.4 billion), in a stock and cash transaction for $95 per share based on Friday’s closing price.

The agreement, which has a total value of $67.1 billion including DIRECTV’s debts, has been approved unanimously by the Boards of Directors of both companies.

It is subject to approval by DIRECTV shareholders and review by the US Federal Communications Commission, US Department of Justice, a few US states and some Latin American countries and should close within the next 12 months.

“This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens – mobile devices, TVs, laptops, cars and even airplanes. At the same time, it creates immediate and long-term value for our shareholders,” said Randall Stephenson, AT&T chairman and CEO. “DIRECTV is the best option for us because they have the premier brand in pay TV, the best content relationships, and a fast-growing Latin American business. DIRECTV is a great fit with AT&T and together we’ll be able to enhance innovation and provide customers new competitive choices for what they want in mobile, video and broadband services. We look forward to welcoming DIRECTV’s talented people to the AT&T family.”

“This compelling and complementary combination will bring significant benefits to all consumers, shareholders and DIRECTV employees,” said Mike White, president and CEO of DIRECTV. “U.S. consumers will have access to a more competitive bundle; shareholders will benefit from the enhanced value of the combined company; and employees will have the advantage of being part of a stronger, more competitive company, well positioned to meet the evolving video and broadband needs of the 21st century marketplace.”