In a deal that was first hinted at last week, AT&T Inc announced on October 24 a deal to acquire Timer Warner. The deal values Time Warner at $85.4 billion, while the total transaction value comes in at $108.7 billion when Time Warner's net debt is included.
Under the terms of the deal, Time Warner shareholders will receive $107.50 per share which includes $53.75 per share in cash and $53.75 per share in AT&T stock. AT&T expects that it will save $1 billion a year in costs, due to corporate and procurement efficiency, within three years of the Time Warner deal closing. AT&T and Time Warner will still have to get through regulatory approval before the deal could close at some point in 2017.
The expected cost savings are primarily driven by corporate and procurement expenditures.
"Time Warner’s leadership, creative talent and content are second to none," Randall Stephenson, AT&T chairman and CEO, said in a statement. "Combine that with 100 million plus customers who subscribe to our TV, mobile and broadband services and you have something really special."
Time Warner Chairman and CEO Jeff Bewkes commented that by joining forces with AT&T, his company will be able to innovate even more quickly.
"Combining with AT&T dramatically accelerates our ability to deliver our great brands and premium content to consumers on a multi-platform basis and to capitalize on the tremendous opportunities created by the growing demand for video content," Bewkes said in a statement. "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."
One thing the Time Warner deal will not be bringing to AT&T is any additional network cable capability. Time Warner Cable isn't actually part of Time Warner and hasn't been since 2009 when the cable division was spun out into a standalone business. In May 2016, Time Warner Cable was acquired by Charter in a deal valued at $78.7 billion.
Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist