The price was perhaps too good to pass up, and Time Warner Inc (NYSE:TWX) CEO Jeff Bewkes, who snubbed an offer from Fox two years ago, caved in to AT&T’s merger overture.
The $85.4 billion deal, one for the record books certainly, will see AT&T, which gobbled up DirecTV just last year, morph into a media powerhouse from being just a telecom giant.
Shares in Time Warner Inc (NYSE:TWX) jumped 7.82% Friday, closing at $89.48 on volume of 51.13 million shares. That followed a 4.7% jump on Thursday, when Bloomberg first reported on a deal brewing.
Time Warner Inc (NYSE:TWX) bought out by AT&T, Stephenson to head the behemoth
The offer to TWX shareholders is $107.50 per share held comprising $53.75 in cash and an equal amount of AT&T stock. The combined company will be led by AT&T CEO Randall Stephenson, with TWX CEO Jeff Bewkes staying on for an interim transitionary period.
AT&T will fund the cash component of the deal with its existing cash and new debt.
AT&T will get its hands on some media gems such as Warner Bros., Turner Broadcasting networks, CNN, and most of all, HBO.
Regulatory issues will most certainly prevail, considering it took AT&T a year to get the DirecTV acquisition through.
However, Stephenson is not worried and commented on a conference call that he was really buying a supplier (of content), not eliminating a competitor.
Time Warner Inc (NYSE:TWX): what the AT&T deal is all about
It’s a marriage of content and delivery.
“If you put these two together, you can begin to innovate these types of new services much faster, and get this to market much faster,” said Stephenson on a call with the media on Saturday. “That’s what this is all about.”
“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, AT&T Chairman and CEO, said in a statement. “We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications.”
It’s also about a trophy bride that went through a regimen of slimming and reconstruction. Under low-profile CEO Jeff Bewkes, Time Warner rid itself of the ghosts from the ill-fated AOL merger, and spun out Timer Warner Cable and Time Inc. As a result, TWX became a pure play film and video content provider and was therefore able to get a massive premium from AT&T.
Bewkes stands vindicated for saying ‘no’ to Fox in 2014.