AT&T is in active talks to buy DirecTV and may complete a deal in the next few weeks that could be worth close to $50 billion, said a Reuters story. AT&T 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% to its stock price before news of AT&T’s interest first emerged on 5/1, said the story.
Other details also have yet to be worked out, such as a break-up fee as well as a potential role for DirecTV CEO Mike White, the second person told Reuters.
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.
DirecTV shares rose 6% to $92.50 in extended trading 5/12.
DirecTV is working with advisers including Goldman Sachs Group to evaluate a possible combination following a recent takeover approach from AT&T, Reuters reported last week.
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.
“This is not the first time that AT&T and DirecTV have danced around the fire and thought if they could give it a go,” ReconAnalytics analyst Roger Entner told Reuters. “They both looked at each other for at least 10 years. Both kind of came to the conclusion that it was in the right environment. It makes a lot of sense to get together, but there was never the right regulatory environment for it.”
“They both see the Grim Reaper at the horizon. DirecTV hasn’t gone out and bought spectrum. Dish has, so DirecTV needs to find a partner, and AT&T is that partner,” he said.