AT&T May Take Over DirecTV in a $50 Billion Deal

by Istvan Fekete on May 13, 2014

AT&T is about to sign on the dotted line in a DirecTV takeover and is ready to shell out nearly $50 billion for the satellite-television provider, people familiar with the matter speaking with the Wall Street Journal have said. The deal would involve a mix of cash and AT&T stock and is said to be closing in two weeks or sooner.

The deal is interesting for AT&T, as it would allow the carrier to free up valuable bandwidth for its Internet connections to customers’ homes. The deal would be attractive to AT&T at $105 per share, according to a Barclays analysis.

For DirecTV, the deal proposal comes after a slowdown in customer growth in recent quarters, reflecting a broader stagnation in the US pay TV market. Cable companies have been able to offset the decline in video subscribers by selling broadband, but satellite operators’ speed offerings are limited by the technology they have chosen. A deal with AT&T would give DirecTV a way out of the broadband dilemma.

The news comes after Comcast announced an agreement to buy Time Warner Cable for $45 billion earlier in February. That deal would create a giant dominating the country’s major markets.

Of course, AT&T wasn’t the only company eyeing up DirecTV, but Dish Network (another potential buyer) chairman Charlie Ergen dropped his takeover plans simply because the company he runs could not outbid AT&T.

“DirecTV’s shares were up 5%, or $4.57, at $91.73 in after-hours trading after finishing down less than 1% at $87.16 in 4 p.m. Nasdaq Stock Market trading on Monday. The parties are discussing a price for the El Segundo, Calif., company in the low to mid-nineties per share, one of the people said.”

“At $95 a share, a deal would value DirecTV at nearly $48 billion according to a share count in DirecTV’s latest quarterly report.”

There is no guarantee that the two parties (AT&T and DirecTV) will close the deal within two weeks as expected – the two companies have come close to combining before, but have been so far unable to agree on the final price, people familiar with the matter say.

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

{ 1 comment }

tim salivan May 13, 2014 at 6:17 pm

AT&T and DirecTV had come close to a deal once, but they hadn’t agreed to a price then.

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