On October 22, 2016, AT&T Inc. announced the acquisition of Time Warner Inc. in a stock and cash transaction valued at $108.7bn including Time Warner’s $23.3bn Net Debt. AT&T will pay $107.50 per share to Time Warner, which includes a premium of 52.5% on Time Warner’s $89.5 closing share price on October 21st.
The acquisition, which represents the largest deal of 2016, has been unanimously approved by the boards of directors of both companies and it is expected to trigger strong revenue synergies and greater efficiencies. According to Jeff Bewkes – Time Warner’s CEO – the company will be able to leverage on AT&T’s platform to deliver high quality contents and consolidate the value of its brand. The acquisition is the effect of the company’s need to find new and more powerful distribution channels. The completion date is expected to be by the end of 2017.
AT&T Inc. (NASDAQ T:NYQ) is the largest communications holding company in the world. Headquartered in San Antonio, Texas, it was founded in 1875 under the name of American Telephone and Telegraph Corporation. AT&T operates mainly through four business segments: Business Solutions, Entertainment Group, Consumer Mobility and International. The company is regarded to be the world leading provider of IP-based communication services and the leader in the US for high-speed Internet, wireless connection, and long-distance voice services.
In a wave of consolidation of the industry, AT&T has completed the acquisition of Cellular Properties Inc. (January) and QuickPlay Media Inc. (May) in 2016.
In 2015, AT&T reported Revenues for $146.8bn showing a 10.8% increase with respect to 2014, while net income improved by 107.2% from $6.4bn to $13.4bn.
Time Warner Inc.
Time Warner Inc. (NASDAQ TWX:NYQ), previously known as AOL Time Warner, is a US media and entertainment company. The company was created as a result of the merger between Time Inc. and Warner Communications in 1990 and is now headquartered in New York City.
It is mainly focused on three lines of business: Turner, offering cable networks and digital media services; Home Box Office, its premium pay television and streaming service; and Warner Bros., dealing with filmed entertainment and distribution of home video and videogames.
Time Warner managed to establish industry-leading brands across all the main platforms primarily through growth, engagement and monetization. Its products span from Harry Potter to the CNN. HBO, which is the oldest operating pay television service in the US, owns some of the most popular TV series of all times like Sex and the City, Game of Thrones and the newly released Westworld.
The company’s revenues amounted to $28.1bn in 2015, with a 2.8% increase from 2014, whilst there was virtually no change in Net Income with respect to the previous year ($3.83bn). The company has an operating margin of 25.3% and delivers a 16.7% return on equity to its shareholders.
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