AT&T Agrees to Buy DirecTV for $48.5Bn

AT&T agreed over the weekend to buy No.2 U.S. pay-TV operator DirecTV for about $48.5 billion, adding to the consolidation frenzy that’s shaping up in that country.

The boards of both companies approved the merger on Sunday, with AT&T agreeing to pay the satellite leader’s shareholders $95 per share–$28.50 per share in cash and $66.50 per share worth in AT&T stock. Including DirecTV’s debt, the total value of the transaction is actually about $67.1 billion.

Shareholders will receive 1.905 AT&T shares if AT&T stock price is below $34.90 at closing, or 1.724 AT&T shares if its stock price is above $38.58. If AT&T’s stock price at closing is between $34.90 and$38.58, DirecTV shareholders will receive between 1.724 and 1.905 shares of AT&T stock, equal to $66.50 in value.

“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,” said Randall Stephenson, AT&T’s chairman and CEO, in a statement Sunday.

The acquisition surprised some who expected the telco to quest instead after DISH Network, which holds valuable nationwide spectrum that AT&T can use to further its LTE ambitions. But the DirecTV seems to be all about the triple-play, giving AT&T a nationwide video install base to which it can sell broadband, a service DirecTV doesn’t have. And, it expands its video presence significantly from existing U-verse IPTV markets. In short, AT&T will have more flexibility in bundling services.

AT&T has about 5.7 million video customers in 22 states. DirecTV has about 20 million customers nationwide and is the second-largest pay-TV provider behind Comcast. It also has 18 million customers in Latin America, a region AT&T has no existing business in.

If approved by regulators, DirecTV will operate as AT&T’s subsidiary and continue to be based in its current headquarters in El Segundo, Calif.

The announcement comes as Comcast attempts to win approval to buy No 2. Cable MSO Time Warner Cable for about $45 billion. Conventional wisdom holds that if the Department of Justice and other regulators say yes to Comcast then it will be forced to also say yes to AT&T.

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