AT&T Inc. (NYSE:T) announced Sunday that it has reached a definitive agreement to acquire DirecTV (NASDAQ:DTV) in a stock-and-cash transaction of $95 per share.

AT&T Directv

The agreement has been approved unanimously by the Boards of Directors of both companies.

To combine complementary strengths

It was reported recently that AT&T Inc. (NYSE:T) and DIRECTV (NASDAQ:DTV) were in talks about a combination of their own. A deal between the two would create a pay-television behemoth that would serve over 25 million subscribers.

AT&T Inc. (NYSE:T) needs to make a deal to keep up with Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK) given the looming Time-Warner merger and that DirecTV also needs to make a deal to keep up with the competition.

In its statement Sunday, AT&T Inc. (NYSE:T) said the deal with DirecTV combines complementary strengths to create a unique new competitor with unprecedented capabilities in mobility, video and broadband services.  Mike White, president and CEO of DirecTV said: “This compelling and complementary combination will bring significant benefits to all consumers, shareholders and DirecTV employees”.

A low-down on the deal

As part of the deal, AT&T Inc. (NYSE:T) is offering $95 per DirecTV share in a combination of stock and cash. The cash portion of $28.50 per share will be financed by cash, asset sales, financing already lined up and other ‘opportunistic debt market transactions’.

AT&T Inc. (NYSE:T) said it anticipates the takeover to deliver cost savings at an annual rate of $1.6 billion by the third year after closing. To facilitate regulatory approval, AT&T will sell its roughly 8% stake in Carlos Slim’s America Movil.

The transaction has a total value of $67.1 billion, including DirecTV’s net debt.

The latest announcement from AT&T Inc. (NYSE:T) comes just three months after Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK)’s $45 billion agreement to buy Time Warner Cable Inc. The recent deals highlight how the biggest companies in television and telecommunications are bulking up to face a changing media landscape.

Interestingly, in March, it was reported Charlie Ergen, CEO of DISH Network Corp (NASDAQ:DISH), approached Mike White, CEO of DirecTV to discuss the possibility of combining the two satellite television service providers.

AT&T Inc. (NYSE:T) is likely to face some questions from regulators about the latest deal’s impact on competition in those areas where its U-verse service now competes with DirecTV (NASDAQ:DTV) in offering television.