AT&T to offer Time Warner $85 billion in biggest deal of 2016, announcement likely Sunday

NEW YORK - AT&T Inc is reportedly closing in on a deal to buy Time Warner Inc for nearly $85 billion, the transaction likely to be the biggest this fiscal and the largest in recent years in ...


• AT&T will pay $110 per Time Warner share in cash and stock, or about $85 billion overall

• The deal, which has been agreed on most terms and could be announced as early as Sunday

• Analysts say a deal between AT&T and Time Warner would carry significant regulatory activity

NEW YORK - AT&T Inc is reportedly closing in on a deal to buy Time Warner Inc for nearly $85 billion, the transaction likely to be the biggest this fiscal and the largest in recent years in the telecommunications sector.  

The deal, which has been agreed on most terms and could be announced as early as Sunday, would give the telecom company control of cable TV channels CNN and HBO, film studio Warner Bros and other renowned media assets.

AT&T will pay $110 per Time Warner share in cash and stock, or about $85 billion overall, sources in know of the development said. 

Analysts said AT&T Inc will have to line up funds for the transaction with only about $7.2 billion in cash. This could put pressure on its credit rating as it already has $120 billion in net debt as of June 30, according to Moody's note.

Time Warner's stock rose almost 8 percent in regular trading, and a further 3.4 percent after business hours to $92.50, translating to a market value of about $73 billion. AT&T ended down 3 percent at $37.49.

The media industry off late is considered ideal for consolidation, and several sector shares rose on the news, including Netflix Inc, which settled up 3.4 percent, and Discovery Communications Inc, which ended up 3.6 percent.

AT&T, which deals in wireless phone and broadband services, has already started to turn itself into a media powerhouse, acquiring satellite TV provider DirecTV last year for $48.5 billion. It also entered a joint venture, Otter Media, with the Chernin Group to invest in media businesses in 2014.

Time Warner is a name to reckon with in television, movies and video games. Its assets include the HBO, CNN, TBS and TNT networks as well as the Warner Bros film studio, producer of the popular 'Batman' and 'Harry Potter' film franchises. 

The Wall Street Journal reported on Friday that Apple Inc also approached Time Warner a few months ago about a possible merger.

The terms of the AT&T transaction is expected to be higher than the $85-a-share deal that 21st Century Fox was willing to pay for Time Warner in 2014. Time Warner had turned down the proposal, saying it could create more value for shareholders by staying independent, and 21st Century Fox, led by Rupert Murdoch, took back the offer.

Market participants said the deal is an audacious move with the impending U.S. presidential election, which will most likely result in a reshaping of the top regulators that will scrutinise this transaction. Most analysts have surmised that a deal between AT&T and Time Warner would carry a significant amount of regulatory activity.

 

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