AT&T Inc. said Sunday it will buy satellite-television provider DirecTV in a stock-and-cash deal worth $67.1 billion.
The mega-deal would create a corporate communications behemoth, pairing AT&T’s networks of traditional telephone land lines, mobile phones and tablets, Internet service and U-verse cable television service with DirecTV’s satellite television service. The transaction will affect thousands of Wisconsin households.
With the $95-per-share deal, approved by both firms’ boards, DirecTV shareholders will receive $28.50 per share in cash, along with $66.50 per share in AT&T stock, with provisions adjusting the stock portion of the offer based on further movements in AT&T shares.
The total value “implies an adjusted enterprise value multiple of 7.7 times DirecTV’s 2014 estimated EBITDA (earnings before taxes and other charges), AT&T said in announcing the acquisition of the El Segundo, Calif.-based company.
AT&T said it would finance the deal “through a combination of cash on hand, sale of non-core assets, committed financing facilities and opportunistic debt market transactions.”
AT&T also said it would sell off its interest in América Móvil SAB in order to ease regulatory approval of the deal.
AT&T also said the new entity would be committed “for three years after closing” to upholding current net neutrality rules as established in 2010, “irrespective of whether the FCC re-establishes such protections for other industry participants following the DC Circuit Court of Appeals vacating those rules.”
AT&T said the deal would likely close within “approximately 12 months,” and would be accretive to AT&T’s earnings within 12 months after the close.
The deal for El Segundo, Calif.-based DirecTV would still need approval from its shareholders, along with federal and some state regulators and several Latin American countries, AT&T said.
The two firms plan to hold a webcast to discuss the deal on Monday at 8:30 a.m. Eastern time.
In touting the worth of the deal, AT&T said: “The transaction enables the combined company to offer consumers bundles that include video, high-speed broadband and mobile services using all of its sales channels — AT&T’s 2,300 retail stores and thousands of authorized dealers and agents of both companies nationwide.”
“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&T chief executive officer Randall Stephenson said in the statement announcing the planned transaction. “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.”
DirecTV has premier content, particularly live sports programming. It has the exclusive pay TV rights to NFL Sunday Ticket that provides every out-of-market game every Sunday afternoon on TV, laptops and mobile devices.
AT&T’s stock shares declined 25 cents to $36.47 today in the aftermath of the announcement.
