AT&T to buy Time Warner in $85.4 billion cash, stock deal

AT&T Inc. agreed to buy Time Warner Inc. for $85.4 billion, forming a telecommunications and media empire that will own many of the movies and TV shows it pumps through to subscribers of its wireless, internet and pay-TV services. The cash-and-stock deal values Time Warner at about $107.50 a share, the companies said Saturday in a statement, 20 per cent more than Friday’s closing price. Time Warner shareholders are to receive $53.75 per share in cash and $53.75 a share in AT&T stock. “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,” AT&T Chairman and Chief Executive Officer Randall Stephenson said in the statement. The deal caps Stephenson’s vision to expand AT&T into media and entertainment as its wireless business matures. Gaining premium cable channel HBO, CNN and the Warner Bros. studio means AT&T becomes a content owner rather than just a distributor of video. The combination will “disrupt the traditional entertainment model and push the boundaries on mobile content availability,” according to the statement. The acquisition comes a little more than a year after Dallas-based AT&T became the largest US pay-TV distributor when it completed its $48.5 billion purchase of satellite-TV provider DirecTV. The transaction is valued at $108.7 billion including Time Warner’s net debt. Once the deal closes, Time Warner shareholders will own from 14.4 per cent to 15.7 per cent of AT&T shares. AT&T expects the deal to be accretive in the first year and sees $1 billion in annual cost synergies within three years of closing. (Lisa Wolfson and Scott Moritz/Bloomberg)