AT&T is in active talks to buy satellite TV provider DirecTV and may complete a deal in the next few weeks that could be worth close to $50 billion, two people familiar with the matter said Monday.
The second-largest wireless operator is discussing an offer in the low- to mid-$90s per share for DirecTV, one of the people said, compared with the company’s closing price of $87.16 on Monday.
A bid near $95 per share would value DirecTV at more than $48 billion based on its shares outstanding and would represent a premium of more than 20 percent to its stock price before news of AT&T’s interest first emerged May 1.
The deal price has yet to be finalized and terms could still change, the people said, adding that discussions are continuing. They asked not to be named because the matter is not public.
Other details also have yet to be worked out, such as a breakup fee as well as a potential role for DirecTV Chief Executive Officer Mike White, the second person said.
The talks are the latest sign of a rising tide of potential megadeals in the telecoms, cable and satellite TV space, which is being roiled by Comcast’s proposed $45 billion takeover of Time Warner Cable as well as market forces such as the rise of Web-based TV and surging mobile Internet usage.
AT&T and DirecTV declined to comment. Bloomberg News earlier reported that AT&T was offering to pay around $100 per share for DirecTV, whose management team will continue to run the company as a unit of AT&T. The Wall Street Journal said a deal could happen in two weeks.
A combination of AT&T and DirecTV would create a pay television giant close in size to where Comcast will be if it completes its pending acquisition of Time Warner Cable. For that reason, the proposed merger is likely to face a prolonged battle to convince regulators to allow further consolidation in pay-TV.
A Comcast-Time Warner Cable merger would call for a counterweight like a combined AT&T-DirecTV, said ReconAnalytics analyst Roger Entner. He added that the merger would make sense for DirecTV given the decline of satellite TV.
Read the full story at: reuters.com