Carrier company AT&T to acquire Time Warner in the biggest media acquisition of the year. The deal will cost AT&T $85.4 billion.
New Delhi-Oct 23, 2016. Rednewswire/-
After taking a long time in decision making, AT&T is all ready to buy Time Warner paving way for the country’s biggest media horizon. The deal is fixed at a cost of $85.4B which AT&T will be paying in a combination of cash and shares.
The total acquisition cost will approximate to $107. 50 per share which will be paid half in cash and half through AT&T stocks. This means that each share of Time Warner investors will be getting $53.75 cash $53.75 AT&T stock. After the deal, 14.4% and 15.7% of all AT&T’s outstanding shares will be transferred to Time Warner’s share holders. The deal is expected to be finalized by the end of 2017.
The new venture will be headed by Randall Stephenson, chief executive of AT&T. However, Chief Executive of Time Warner, Jeff Bewkes will stay for a specific period after the deal to help out with the change. This new acquisition will lead to wireless and DTH subscribers of AT&T to sync with Time Warner‘s media platforms which include CNN, HBO, TNT and the eminent Warner Bros productions. AT&T is sure that combination of television and video can achieve success in the wireless market.
“Jeff and I have a vision that if you put these things together, you can iterate and develop content differently for these new platforms,” Mr. Stephenson said.
Both the companies aim to be the first US venture to provide videos akin to people’s traditional TV sets, competing globally with all other cable companies. Since last year, AT&T wanted to negotiate with content platforms and to come up with an innovative video service which would allow its viewers to stream programs on the internet eliminating the need of a dish.
AT&T had also recently acquired DirecTV for $50 billion. According to the Journal, AT&T and Time Warner had a market capitalization $233 billion and $68 billion respectively before the deal. If the deal is completed, AT&T will depend on its entertainment business for over 40 percent of its revenue.
According to sources, in case of a breakup AT&T will be paying a fee of $500 million and Time Warner would pay $1.7 billion.