9 months, 2 weeks ago Reuters
Deal would enable both companies to add services they are currently lacking
AT&T Inc plans to pay $48.5 billion to buy DirecTV, in the latest sign that the wireless industry and the U.S. television market are set to converge as customers consume more video on their mobile devices.
The deal, announced on Sunday, highlights AT&T's pressing need for fresh avenues of growth beyond the maturing U.S. cellular business, which has become increasingly competitive.
The combination with DirecTV, the No.1 U.S. satellite TV provider with 20 million customers, would beef up Dallas-based AT&T's packages of cellular, broadband, TV and fixed-line phone services.
For DirecTV, the deal will enable it to offer broadband Internet for the first time to its U.S. customers, filling in a gap that had made the company vulnerable to cable rivals, which can provide Internet service through their networks.
"It gives us the parts to fulfill a vision we have had for a couple of years, that is, the opportunity and the ability to take premium content and deliver premium content over multiple points for the customer, whether it be through a smartphone, through a tablet, or television or laptop," said AT&T CEO Randall Stephenson, speaking on a conference call.
Stephenson's counterpart at DirecTV, Mike White, will stay on to run the satellite television business, which will continue to be based outside Los Angeles in El Segundo, California.
AT&T currently offers a video service known as U-Verse and Stephenson said during a conference call the company would continue to offer it after the acquisition is completed. It expects the deal to close in about a year.
AT&T and DirecTV made their announcement just a few months after Comcast Corp offered $45 billion for Time Warner Cable Inc, a transaction that would create the leading U.S. cable and broadband Internet powerhouse. The Comcast proposal is now awaiting regulatory approval.
AT&T is offering $95 per DirecTV share in a combination of stock and cash, a 10 percent premium over Friday's closing price of $86.18. It will finance the cash portion, $28.50 per share, with funds on hand, asset sales and financing already lined up.
The transaction has a total value of $67.1 billion, including the assumption of DirecTV's net debt.
To help its case with regulators, AT&T will sell its roughly 8 percent stake in Carlos Slim's America Movil, worth roughly $5 billion. DirecTV has some 18 million customers throughout Latin America.