updated - August 14, 2020 Friday EDT
AT&T Inc., the second largest wireless carrier in the United States, announced on Friday it had completed the acquisition of DirecTV, the leading pay TV company in the country, a deal valued at $48.5 billion that creates the biggest cable company in the U.S.
AT&T said in a statement that the transaction makes it the pay TV industry leader worldwide, with more than 217 million customers in the Americas on top of the hundreds of million subscribers to its various wireless, mobile and internet services.
AT&T will pay DirecTV shareholders with 1.982 of its shares plus $28.5 in cash for their DirecTv shares.
Reuters reported that it took the Federal Communications Commission more than a year to give its green light to deal. It added that the FCC also imposed conditions to be enforced by internal and external compliance officers to protect the public interest. These include protection to competitors as well as pledges to provide high-speed internet to low-income Americans. The Justice Department, meanwhile, approved the deal on Tuesday seeing no danger on competition from the merger.
AT&T Chairman and CEO Randall Stephenson said the merger will allow its subscribers to benefit from the integration of its Internet service with the video offerings of DirecTV.
"This transaction allows us to significantly expand our high-speed Internet service to reach millions more households, which is a perfect complement to our coast-to-coast TV and mobile coverage," Stephenson said. "We're now a fundamentally different company with a diversified set of capabilities and businesses that set us apart from the competition."
Reuters said shares of AT&T and DirecTV rose by 1.1 percent and 1.5 percent respectively to $34.29 and $93.55 at the market close.
The wire agency noted that the acquisition allows AT&T to diversify into providing content and expand its footprint in Mexico as the U.S. wireless market matures. It added that analysts were initially skeptical of the deal with DirecTV's business stagnating as consumers watch more videos on mobile devices.
AT&T announced that John Stankey, a senior executive in the company, will become CEO of AT&T Entertainment & Internet Services, which will oversee the integrated DIRECTV and AT&T Home Solutions operations. Stankey will report to Stephenson. Mike White, DirecTV's Chairman, President and CEO, will retire.
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