AT&T (NYSE: T) has agreed to acquire Time Warner (NYSE: TWX) in a stock-and-cash transaction valued at $107.50 per share, a mega-merger that combine AT&T’s wireless, broadband and satellite TV services with Time Warner’s vast portfolio, which includes the Warner Bros. movie studio and cable TV networks like CNN and HBO.
AT&T – Time Warner Merger
The purchase price implies a total equity value of $85.4 billion and a total transaction value of $108.7 billion, including Time Warner’s net debt. The agreement has been approved unanimously by the boards of directors of both companies.
ValueWalk's Raul Panganiban David Barse, Founder and CEO of XOUT Capital, and discuss his unique approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with XOUT Capital's David Barse
Reports of a potential deal proliferated the headlines Friday, and investors seemed to like the idea—at least from Time Warner’s perspective. TWX stock shot up from below $80 per share on Thursday to nearly $94 at one point, finishing the day at $89.48 per share and giving the company a market value of about $70 billion. AT&T stock, meanwhile, took a bit of a tumble after reports of an approaching deal, falling about 3% from end-of-day Thursday to finish the week at $37.49.
A successful close would create a company with a market cap of roughly $300 billion, dwarfing potential rivals such as Comcast (owner of NBCUniversal) and Disney (owner of ABC). It would also ostensibly create a whole new host of distribution outlets for Time Warner’s catalog of content. For AT&T, adding Time Warner—particularly crown jewel HBO—to a portfolio that already includes DirecTV would, oddly, turn the 20th-century icon of telecommunications into a major player in the 21st century’s shifting landscape of “television.”
AT&T wasn’t alone in its pursuit of Time Warner: Apple approached the company about a potential deal earlier this year, according to The Wall Street Journal.
So what made Time Warner such an attractive target? One fact is surely the company’s move to become a leaner content carrier by divesting signature holdings such as Time magazine, AOL and Time Warner Cable, which was sold to Charter Communications for nearly $80 billion earlier this year.
Article by Adam Putz, PitchBook