AT&T to Buy Time Warner for $107.50 Per Share

DALLAS and NEW YORK CITY — Telecommunications giant AT&T has agreed to acquire NY-based Time Warner in a stock-and-cash transaction valued at $107.50 per share or $85.4 billion. The agreement was approved unanimously by the boards of directors of both companies over the weekend.

Time Warner owns cable networks HBO, CNN, TNT, TBS along with the Warner Bros. movie studio.

The deal combines Time Warner’s vast library of content and ability to create new premium content that connects with audiences around the world, with AT&T’s extensive customer relationships, world’s largest pay TV subscriber base and leading scale in TV, mobile and broadband distribution.

“This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers,” said Randall Stephenson, AT&T chairman and CEO. “Premium content always wins. It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen. We’ll have the world’s best premium content with the networks to deliver it to every screen. A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that.  We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications.

“With great content, you can build truly differentiated video services, whether it’s traditional TV, OTT or mobile. Our TV, mobile and broadband distribution and direct customer relationships provide unique insights from which we can offer addressable advertising and better tailor content,” Stephenson said. “It’s an integrated approach and we believe it’s the model that wins over time.

Shares in Time Warner were up 6.4% on Friday on reports of a possible combination to close at $89.48. AT&T shares dropped 3% to $37.49. AT&T would have to borrow a large amount of the purchase price to finance the deal.

Time Warner shareholders will receive $107.50 per share under the terms of the merger, comprised of $53.75 per share in cash and $53.75 per share in AT&T stock. The stock portion will be subject to a collar such that Time Warner shareholders will receive 1.437 AT&T shares if AT&T’s average stock price is below $37.411 at closing and 1.3 AT&T shares if AT&T’s average stock price is above $41.349 at closing.

AT&T bought satellite TV provider DirecTV for $48.5 billion last year.

Time Warner rebuffed a takeover attempt in 2014 from 20th Century Fox for $80 billion.