Joe Expert

Joe Expert

Master Trader
Technical Analysis
Trading Styles

AT&T buys DirecTV in $48.5 billion deal

19 May 2014

AT&T has agreed to acquire DirecTV in a deal worth approximately $48.5 billion. Both firms’ boards met on Sunday to approve the merger, although it is still subject to regulatory approval. Set to gain 38 million video subscribers in the US and Latin America, the deal means AT&T will assume control of America’s biggest satellite television provider. It serves as the latest indication that the US television market and wireless industry are converging. AT&T-DirecTV now looks set to become the second largest provider of television subscribers behind Comcast-Time Warner Cable.

AT&T CEO Randall Stephenson has coined the agreement as a ‘unique opportunity’ that will ‘redefine the video entertainment industry’. Stephenson went on to describe DirecTV as the ‘best option’ for AT&T. He cited its excellent branding, strong content relationships and fast growing Latin American branch as key factors in the deal. DirecTV’s chief Michael White echoed the remarks of Stephenson, affirming ‘I think our future is bright together in ways that make both of our companies stronger’. DirecTV stock has been valued at $95 per share in the merger, marking a 10% premium on Friday’s closing price of $86.18. The payment will be split between $28.50 in cash and the equivalent of $66.50 in stock. AT&T will also assume DirecTV debts; thus the total value of the deal exceeds $67 billion. Paul Gallant, an analyst at Guggenheim Partners, likens the deal to a ‘kind of an arm’s race’. Gallant suggests that ‘If regulators decide they're OK with Comcast-TWC, AT&T-DirecTV starts to look like a nice counterweight to the bulked-up Comcast’. DirecTV shares have gained 25% in the calendar year, the majority of which has been fuelled by merger speculation. Warren Buffet’s Berkshire Hathaway (DirecTV’s majority 6.85% stakeholder) will also be pleased with developments. DirecTV shares were up 0.66% in pre-market trading early Monday morning; AT&T stock was down 2.78% at the time of writing. Visit InterTrader to set up your spread betting account today.

About the Author

Joe Expert

Lorem ipsum dolor sit amet sit, consectetur adipiscing elit. Maecenas vestibulum ornare ipsum quis aliquam. Ut egestas dolor risus, sed vehicula massa molestie ullamcorper. Duis in lacinia enim. Duis congue lobortis iaculis. Phasellus tristique venenatis nisl ut ornare. Quisque congue ipsum quis magna finibus dignissim. Duis fringilla aliquet arcu, et convallis risus vulputate sed. Praesent sit amet est tempor, interdum nisi sit amet, ullamcorper felis. Etiam iaculis justo et metus mattis, eget viverra augue luctus. Suspendisse ac diam sem.