AT&T agrees to acquire Time Warner for $85.4bn in cash and stock

US telecoms giant AT&T has reached an agreement to acquire media and entertainment conglomerate Time Warner for $85.4bn (£69.8bn) in cash and stock.

The wireless carrier said it would pay $107.50 per share – almost a 20% premium on Time Warner’s closing price on Friday 21 October.

The merger would combine AT&T’s hundreds of millions of TV, mobile and broadband subscribers with Time Warner’s vast library of entertainment and media properties, including networks such as CNN, TNT, HBO, and the Warner Bros film studio.

The stock-and-cash transaction has been approved unanimously by the boards of directors of both companies.

AT&T forecasts $1 billion in annual run rate cost synergies within 3 years of the deal closing. The expected cost synergies are mainly driven by corporate and procurement expenditures. The merger would also give the combined company also expects to achieve incremental revenue opportunities that neither firm would be able to obtain on a standalone basis.

AT&T Announces Time Warner Acquisition:

The new company would be led by AT&T Chief Executive Randall Stephenson.

“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 for customers, content creators, distributors and advertisers,” Randall Stephenson said in a statement.

“Premium content always wins. It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen. We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications.”

Time Warner Chairman and CEO Jeff Bewkes said: “This is a great day for Time Warner and its shareholders. Combining with AT&T dramatically accelerates our ability to deliver our great brands and premium content to consumers on a multiplatform basis and to capitalize on the tremendous opportunities created by the growing demand for video content.

“That’s been one of our most important strategic priorities and we’re already making great progress — both in partnership with our distributors, and on our own by connecting directly with consumers.

“Joining forces with AT&T will allow us to innovate even more quickly and create more value for consumers along with all our distribution and marketing partners, and allow us to build on a track record of creative and financial excellence that is second to none in our industry. In fact, when we announce our 3Q earnings, we will report revenue and operating income growth at each of our divisions, as well as double-digit earnings growth.”

The merger is still subject to approval by Time Warner Inc. shareholders and review by the U.S. Department of Justice.

US lawmakers concerned over the AT&T – Time Warner deal

Democratic vice presidential candidate Tim Kaine and several U.S. lawmakers said that the multibillion-dollar merger raises antitrust issues.

On NBC’s “Meet the Press”, Kaine said: “I’m pro-competition.” Adding: “Less concentration, I think, is generally helpful, especially in the media.”

According to Reuters, Mike Lee, chair of the Senate subcommittee on antitrust, and fellow member Amy Klobuchar said in a joint statement:

“We have carefully examined consolidation in the cable and video content industries to ensure that it does not harm consumers. An acquisition of Time Warner by AT&T would potentially raise significant antitrust issues, which the subcommittee would carefully examine.”

Meanwhile, Donald Trump, the Republican presidential candidate, said at a rally on Saturday that he would block the deal if he wins the November election.

“It’s too much concentration of power in the hands of too few,” said Trump.