AT&T to buy DirecTV in $48.5 billion cash and stock deal

Posted at 05/19/14 8:20 AM

DirecTV, the No. 1 U.S. satellite TV operator, said on Sunday it has agreed to sell itself to AT&T for $48.5 billion, in the second mega-deal to shake up the U.S. television landscape this year.

The deal with Dallas-based AT&T, which has some TV and broadband services, is the latest in a string of big takeovers the wireless operator has considered. Those include an abortive bid for T-Mobile USA in 2011, as well as a potential takeover of Vodafone Plc that receded as a possibility after Comcast Corp surprised the industry this year with a $45 billion bid for Time Warner Cable Inc.

AT&T said it 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. The cash portion, $28.50 per share, will be financed by cash, asset sales, financing already lined up and other "opportunistic debt market transactions."

The transaction has a total value of $67.1 billion, including DirecTV's net debt.

As part of the deal, and to facilitate regulatory approval, AT&T will sell its roughly 8 percent stake in Carlos Slim's America Movil. DirecTV has some 18 million customers throughout Latin America, including a stake in Sky Mexico.

AT&T said it expects the takeover to deliver cost savings at an annual rate of $1.6 billion by the third year after closing.

"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 Randall Stephenson said in a statement. "At the same time, it creates immediate and long-term value for our shareholders."

Still, some analysts and investors have questioned why AT&T, which is facing slowing growth, would buy DirecTV at a time when U.S. satellite TV subscriptions have flattened.

The growth of web-based television services could mean that demand for satellite slows further in the coming years.