AT&T has entered into an agreement to purchase DirecTV for about $48.5 billion in a cash and stock transaction.
The acquisition is more about providing AT&T with the means to grow its subscription TV business than about expanding mobile services. The acquisition gives AT&T a nationwide pay-TV footprint, and DirecTV has some compelling sports exclusives that AT&T will be able to offer its customers. AT&T said it will expand plans to build out its wired, fiber broadband network to an additional 15 million rural locations within four years. AT&T committed to offering stand-alone broadband services that don’t include video programming.
AT&T said it will homogenize DirecTV pricing so all consumers will pay the same prices. AT&T committed to abide by the 2010 net neutrality rules proposed by the Federal Communications Commission (even though those rules were eventually struck down). Last, AT&T said this transaction will not impact its plan to bid up to $9 billion in spectrum auctions both later this year and in mid-2015.
The transaction includes DirecTV’s Latin American services, and AT&T will divest its shares of America Movile in order to facilitate the transaction on those regions. DirecTV’s shareholders will receive about $95 per share, including $28.50 in cash and $66.50 in AT&T stock. AT&T intends to finance the transaction through a combination of cash, sale of non-core assets, financing, and debt sales.
The acquisition was approved by both AT&T and DirecTV’s boards of directors, but it is subject to shareholder votes and regulatory review. AT&T expects the deal to close in about 12 months.
