- New company with complementary strengths to lead the next wave of
innovation in converging media and communications industry
-
Combination unlike any other — the world’s best premium content
with the networks to deliver it to every screen, however customers
want it
-
The future of video is mobile and the future of mobile is video
-
Time Warner is a global leader in creating premium content, has
the largest film/TV studio in world and an unrivaled library of
entertainment
-
AT&T has unmatched direct-to-customer distribution across TV,
mobile and broadband in the U.S., mobile in Mexico and TV in Latin
America.
- Combined company positioned to create new customer choices — from
content creation and distribution to a mobile-first experience that’s
personal and social
-
Goal is to give customers unmatched choice, quality, value and
experiences that will define the future of media and communications
-
Customer insights across TV, mobile and broadband will allow new
company to: offer more relevant and valuable addressable
advertising; innovate with ad-supported content models; better
inform content creation; and make OTT and TV Everywhere products
smarter and more personalized
- Acquisition provides significant financial benefits
-
Accretive to AT&T in the first year after close on adjusted EPS &
free cash flow per share basis
-
Improves AT&T’s dividend coverage
-
Improves AT&T’s revenue and earnings growth profile
-
Diversifies AT&T’s revenue mix and lowers capital intensity
-
Committed to strong balance sheet and maintaining investment-grade
credit metrics
- Delivers significant benefits for customers
-
Stronger competitive alternative to cable & other video providers
-
Provides better value, more choices, enhanced customer experience
for over-the-top and mobile viewing
-
More innovation with ad-supported models that shift more cost of
content creation from customers to advertisers
Company Website:
http://www.att.com
DALLAS & NEW YORK -- (Business Wire)
AT&T Inc. (NYSE:T) and Time Warner Inc. (NYSE:TWX) today announced they
have entered into a definitive agreement under which AT&T will acquire
Time Warner in a stock-and-cash transaction valued at $107.50 per share.
The agreement has been approved unanimously by the boards of directors
of both companies.
The deal combines Time Warner's vast library of content and ability to
create new premium content that connects with audiences around the
world, with AT&T's extensive customer relationships, world’s largest pay
TV subscriber base and leading scale in TV, mobile and broadband
distribution.
“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,” said Randall Stephenson, AT&T chairman and CEO. “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’ll have the world’s
best premium content with the networks to deliver it to every screen. A
big customer pain point is paying for content once but not being able to
access it on any device, anywhere. Our goal is to solve that. We intend
to give customers unmatched choice, quality, value and experiences that
will define the future of media and communications.
“With great content, you can build truly differentiated video services,
whether it’s traditional TV, OTT or mobile. Our TV, mobile and broadband
distribution and direct customer relationships provide unique insights
from which we can offer addressable advertising and better tailor
content,” Stephenson said. “It’s an integrated approach and we believe
it’s the model that wins over time.
“Time Warner’s leadership, creative talent and content are second to
none. Combine that with 100 million plus customers who subscribe to our
TV, mobile and broadband services – and you have something really
special,” said Stephenson. “It’s a great fit, and it creates immediate
and long-term value for our shareholders.”
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.
Bewkes continued, “This is a natural fit between two companies with
great legacies of innovation that have shaped the modern media and
communications landscape, and my senior management team and I are
looking forward to working closely with Randall and our new colleagues
as we begin to capture the tremendous opportunities this creates to make
our content even more powerful, engaging and valuable for global
audiences.”
Time Warner is a global leader in media and entertainment with a great
portfolio of content creation and aggregation, and iconic brands across
video programming and TV/film production. Each of Time Warner’s three
divisions is an industry leader: Turner consists of U.S. and
international basic cable networks, including TNT, TBS, CNN and Cartoon
Network/Adult Swim, and has sports right that include the National
Basketball Association, NCAA Men’s Championship Basketball Tournament,
and Major League Baseball; HBO, which consists of domestic premium pay
television and streaming services (HBO Now, HBO Go) featuring such
original series as Game of Thrones, VEEP, and Silicon Valley, as well as
international premium & basic pay television and streaming services; and
Warner Bros. Entertainment, which consists of television, feature film,
home video and videogame production and distribution. Film franchises
include Harry Potter, DC Entertainment, and LEGO; TV series produced
include The Big Bang Theory, The Voice, and Gotham. Time Warner also has
invested in over-the-top and digital media properties such as Bleacher
Report, Hulu and Machinima.
Customer Benefits
The new company will deliver what customers want — enhanced access to
premium content on all their devices, new choices for mobile and
streaming video services and a stronger competitive alternative to cable
TV companies.
With a mobile network that covers more than 315 million people in the
United States, the combined company will strive to become the first U.S.
mobile provider to compete nationwide with cable companies in the
provision of bundled mobile broadband and video. It will disrupt the
traditional entertainment model and push the boundaries on mobile
content availability for the benefit of customers. And it will deliver
more innovation with new forms of original content built for mobile and
social, which builds on Time Warner’s HBO Now and the upcoming launch of
AT&T’s OTT offering DIRECTV NOW.
Owning content will help AT&T innovate on new advertising options,
which, combined with subscriptions, will help pay for the cost of
content creation. This two-sided business model — advertising- and
subscription-based — gives customers the largest amount of premium
content at the best value.
Summary Terms of Transaction
Time Warner shareholders will receive $107.50 per share under the terms
of the merger, comprised of $53.75 per share in cash and $53.75 per
share in AT&T stock. The stock portion will be subject to a collar such
that Time Warner shareholders will receive 1.437 AT&T shares if AT&T’s
average stock price is below $37.411 at closing and 1.3 AT&T shares if
AT&T’s average stock price is above $41.349 at closing.
This purchase price implies a total equity value of $85.4 billion and a
total transaction value of $108.7 billion, including Time Warner’s net
debt. Post-transaction, Time Warner shareholders will own between 14.4%
and 15.7% of AT&T shares on a fully-diluted basis based on the number of
AT&T shares outstanding today.
The cash portion of the purchase price will be financed with new debt
and cash on AT&T’s balance sheet. AT&T has an 18-month commitment for an
unsecured bridge term facility for $40 billion.
Transaction Will Result in Significant Financial Benefits
AT&T expects the deal to be accretive in the first year after close on
both an adjusted EPS and free cash flow per share basis.
AT&T expects $1 billion in annual run rate cost synergies within 3 years
of the deal closing. The expected cost synergies are primarily driven by
corporate and procurement expenditures. In addition, over time, AT&T
expects to achieve incremental revenue opportunities that neither
company could obtain on a standalone basis.
Given the structure of this transaction, which includes AT&T stock
consideration as part of the deal, AT&T expects to continue to maintain
a strong balance sheet following the transaction close and is committed
to maintaining strong investment-grade credit metrics.
By the end of the first year after close, AT&T expects net debt to
adjusted EBITDA to be in the 2.5x range.
Additionally, AT&T expects the deal to improve its dividend coverage and
enhance its revenue and earnings growth profile.
Time Warner provides AT&T with significant diversification benefits:
-
Diversified revenue mix — Time Warner will represent about 15% of the
combined company’s revenues, offering diversification from content and
from outside the United States, including Latin America, where Time
Warner owns a majority stake in HBO Latin America, an OTT service
available in 24 countries, and AT&T is the leading pay TV distributor.
-
Lower capital intensity — Time Warner’s business requires little in
capital expenditures, which helps balance the higher capital intensity
of AT&T’s existing business.
-
Regulation — Time Warner’s business is lightly regulated compared to
much of AT&T’s existing operations.
The merger is subject to approval by Time Warner Inc. shareholders and
review by the U.S. Department of Justice. AT&T and Time Warner are
currently determining which FCC licenses, if any, will be transferred to
AT&T in connection with the transaction. To the extent that one or more
licenses are to be transferred, those transfers are subject to FCC
review. The transaction is expected to close before year-end 2017.
Conference Call/Webcast
On Monday, October 24, at 8:30 am ET, AT&T and Time Warner will host a
webcast presentation to discuss the transaction and AT&T’s 3Q earnings.
Links to the webcast and accompanying documents will be available on
both AT&T’s
and Time
Warner’s Investor Relations websites. AT&T has cancelled its
previously scheduled call to discuss earnings, which had been set for
Tuesday, October 25.
About AT&T
AT&T Inc. (NYSE:T) helps millions around the globe connect with leading
entertainment, mobile, high-speed Internet and voice services. We’re the
world’s largest provider of pay TV. We have TV customers in the U.S. and
11 Latin American countries. We offer the best global coverage of any
U.S. mobile provider*. And we help businesses worldwide serve their
customers better with our mobility and highly secure cloud solutions.
About Time Warner Inc.
Time Warner Inc. (NYSE:TWX) is a global leader in media and
entertainment with a great portfolio of content creation and
aggregation, and iconic brands across video programming and TV/film
production. Each of Time Warner’s three divisions is an industry leader:
Turner consists of U.S. and international basic cable networks,
including TNT, TBS, CNN and Cartoon Network/Adult Swim, and has sports
right that include the National Basketball Association, NCAA Men’s
Championship Basketball Tournament, and Major League Baseball; HBO,
which consists of domestic premium pay television and streaming services
(HBO Now, HBO Go) featuring such original series as Game of Thrones,
VEEP, and Silicon Valley, as well as international premium & basic pay
television and streaming services; and Warner Bros. Entertainment, which
consists of television, feature film, home video and videogame
production and distribution. Film franchises include Harry Potter, DC
Entertainment, and LEGO; TV series produced include The Big Bang Theory,
The Voice, and Gotham. Time Warner also has invested in over-the-top and
digital media properties such as Bleacher Report, Hulu and Machinima.
Cautionary Language Concerning Forward-Looking Statements
Information set forth in this communication, including financial
estimates and statements as to the expected timing, completion and
effects of the proposed merger between AT&T and Time Warner, constitute
forward-looking statements within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These estimates and statements are subject to risks and uncertainties,
and actual results might differ materially. Such estimates and
statements include, but are not limited to, statements about the
benefits of the merger, including future financial and operating
results, the combined company’s plans, objectives, expectations and
intentions, and other statements that are not historical facts. Such
statements are based upon the current beliefs and expectations of the
management of AT&T and Time Warner and are subject to significant risks
and uncertainties outside of our control.
Among the risks and uncertainties that could cause actual results to
differ from those described in the forward-looking statements are the
following: (1) the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement, (2) the risk that TIME WARNER stockholders may not adopt the
merger agreement, (3) the risk that the necessary regulatory approvals
may not be obtained or may be obtained subject to conditions that are
not anticipated, (4) risks that any of the closing conditions to the
proposed merger may not be satisfied in a timely manner, (5) risks
related to disruption of management time from ongoing business
operations due to the proposed merger, (6) failure to realize the
benefits expected from the proposed merger and (7) the effect of the
announcement of the proposed merger on the ability of TIME WARNER and
AT&T to retain customers and retain and hire key personnel and maintain
relationships with their suppliers, and on their operating results and
businesses generally. Discussions of additional risks and uncertainties
are contained in AT&T’s and TIME WARNER’s filings with the Securities
and Exchange Commission. Neither AT&T nor TIME WARNER is under any
obligation, and each expressly disclaim any obligation, to update,
alter, or otherwise revise any forward-looking statements, whether
written or oral, that may be made from time to time, whether as a result
of new information, future events, or otherwise. Persons reading this
announcement are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote or approval. This communication may be deemed to be solicitation
material in respect of the proposed merger between AT&T and TIME WARNER.
In connection with the proposed merger, AT&T intends to file a
registration statement on Form S-4, containing a proxy
statement/prospectus with the Securities and Exchange Commission
(“SEC”). STOCKHOLDERS OF TIME WARNER ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
MERGER. Investors and security holders will be able to obtain copies of
the proxy statement/prospectus as well as other filings containing
information about AT&T and TIME WARNER, without charge, at the SEC’s
website, http://www.sec.gov.
Copies of documents filed with the SEC by AT&T will be made available
free of charge on AT&T’s Investor
Relations Website. Copies of documents filed with the SEC by TIME
WARNER will be made available free of charge on TIME WARNER’s Investor
Relations Website.
Participants in Solicitation
AT&T and its directors and executive officers, and TIME WARNER and its
directors and executive officers, may be deemed to be participants in
the solicitation of proxies from the holders of TIME WARNER common stock
in respect to the proposed merger. Information about the directors and
executive officers of AT&T is set forth in the proxy statement for
AT&T’s 2016 Annual Meeting of Stockholders, which was filed with the SEC
on March 11, 2016. Information about the directors and executive
officers of TIME WARNER is set forth in the proxy statement for TIME
WARNER’s 2016 Annual Meeting of Stockholders, which was filed with the
SEC on May 19, 2016. Investors may obtain additional information
regarding the interest of such participants by reading the proxy
statement/prospectus regarding the proposed merger when it becomes
available.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161022005014/en/
Contacts:
AT&T
Brad Burns, 214-757-7520
brad.burns@att.com
Fletcher
Cook, 214-757-7629
fletcher.cook@att.com
Source: AT&T Inc.
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