AT&T says it is buying DirecTV for $95 per share, or $48.5 billion, a move that gives the telecommunications company a larger base of video subscribers and increases its ability to compete against Comcast and Time Warner Cable, which agreed to a merger in February.
The agreement has been approved unanimously by the Boards of Directors of both companies.
AT&T's proposed combination, which is subject to government review, could improve its Internet service by pushing its existing U-verse TV subscribers into video-over-satellite service, and thereby free up bandwidth on its telecommunications network.
AT&T currently offers a high-speed Internet plan in a bundle with DirecTV television service. The acquisition would help it further reap the benefits of that alliance.
DirecTV would continue to be based in El Segundo, California, following the merger.
With 5.7 million U-verse TV customers and 20.3 million DirecTV customers in the U.S., the combined entity would serve 26 million. That would make it the second-largest pay TV operator behind a combined Comcast-Time Warner Cable, which would serve 30 million.
The companies expect the deal to close within 12 months. Under the terms agreed to Sunday, DirecTV shareholders will receive $28.50 per share in cash and $66.50 per share in AT&T stock. The total transaction value is $67.1 billion, including DirecTV's net debt.
The deal could face tough scrutiny from the Federal Communications Commission and antitrust regulators at the Department of Justice.
“DIRECTV is the best option for us because they have the premier brand in pay TV, the best content relationships, and a fast-growing Latin American business," said Randall Stephenson, AT&T Chairman and CEO in a statement. "Together we’ll be able to enhance innovation and provide customers new competitive choices for what they want in mobile, video and broadband services. We look forward to welcoming DIRECTV’s talented people to the AT&T family.”
On Monday (May 19) at 8:30 a.m. ET, AT&T and