AT&T chief calls $85bn Time Warner deal 'a perfect match'
US telecoms giant AT&T has agreed to buy Time Warner for $85.4bn (€78.4bn), 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 late on Saturday in a statement.
It is 20pc 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.
Time Warner's business includes pay TV giant HBO, cable TV operator Turner and the Warner Bros movie studio.
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.
"When we first discussed this we thought it might be unique enough and worthy of investigating whether we could put the two companies together and create something different," Stephenson said on a conference call on Saturday night to discuss the deal.
The negotiation process went fast, he said, adding that it had "a gravity to it".
The acquisition comes little more than a year after Dallas-based AT&T became the largest US pay-TV distributor when it completed its $48.5bn purchase of satellite-TV provider DirecTV.
The latest transaction is valued at $108.7bn, including Time Warner's net debt.
AT&T has commitments for a bridge loan of $40bn to finance part of the cash portion of the deal.
JPMorgan Chase is contributing $25bn of the financing, with Bank of America providing the rest, according to a person familiar with the arrangement.
"This is going to supercharge our creative abilities, allow us to experiment more, and it gives us more financial heft," Time Warner chairman and chief executive officer Jeff Bewkes said. "I think it will attract more cutting-edge projects and talent, so we are going full steam ahead."
The deal comes two years after Time Warner's Bewkes and his board rejected an $85-a-share offer from Rupert Murdoch's 21st Century Fox Inc., which valued Time Warner at the time at more than $75bn. (Bloomberg)