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AT&T Sells DirecTV Stake To Private Equity Firm TPG

at&tlogo oct24 25feb21 lt

AT&T Inc. (T) has reached a deal with private equity firm TPG Capital to make its struggling satellite TV provider DirecTV a new standalone company.

The deal will establish a new company that will own and operate AT&T's U.S. video business unit consisting of the DirecTV, AT&T TV and U-verse video services. The new company will have an enterprise value of $16.25 billion.

The company will be jointly governed by a board with two representatives from each of AT&T and TPG, as well as a fifth seat for the CEO, which at closing will be Bill Morrow, CEO of AT&T's U.S. video unit.

Following the close of the transaction, AT&T will own 70% of the common equity and TPG will own 30%.

AT&T will receive $7.8 billion in the deal, which it will use to pay down its mounting debt load. TPG will contribute $1.8 billion in cash to New DirecTV in exchange for preferred units and a 30% interest in common units of New DirecTV.

In 2014, AT&T agreed to buy DirecTV for $48.5 billion, or more than $67 billion including debt.

"This agreement aligns with our investment and operational focus on connectivity and content, and the strategic businesses that are key to growing our customer relationships across 5G wireless, fiber and HBO Max. And it supports our deliberate capital allocation commitment to invest in growth areas, sustain the dividend at current levels, focus on debt reduction and restructure or monetize non-core assets," said AT&T CEO John Stankey.

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