AT&T has entered into an agreement to buy Time Warner for US$85.4 billion in a stock-and-cash transaction that values Time Warner at US$107.50 (A$141.30) a share.
AT&T has been scrambling to add more value to its basic connectivity services, especially given that companies like Apple, Netflix, Facebook and Google are all, to some degree, using its connections to deliver services to consumers and businesses. If this deal closes without a hitch, Time Warner will represent about 15 percent of the combined company's revenues.
Time Warner, a global entertainment and media powerhouse, would bring several media properties to AT&T’s portfolio in the deal, including CNN, HBO, HBO Now and HBO Go, a lucrative package of domestic premium pay television and streaming services.
Time Warner shareholders will receive US$107.50 per share under the terms of the merger, comprised of US$53.75 per share in cash and US$53.75 per share in AT&T stock, according to a statement by AT&T on Saturday.
Following the deal, Time Warner shareholders will own between 14.4 percent and 15.7 percent of AT&T shares on a fully-diluted basis based on the number of AT&T shares outstanding today, the companies said.
The merger is subject to regulatory approvals by the US Justice Department and approval by Time Warner's shareholders.