AT&T Inc. (NYSE:T): Eyeing DirecTV Takeover


Dallas, Texas 05/014/2014 (FINANCIALSTRENDS) –AT&T Inc. (NYSE:T)’s intentions to buyout DirecTV (NASDAQ:DTV) has gone viral since May 1 and the said deal has an obvious correlation to the recent Comcast Corporation (NASDAQ:CMCSA) and Time Warner Cable Inc. (NYSE:TWC) merger. Both AT&T and DirecTV are in talks for almost a decade as they have been looking into a potential merger, but now the opportunity seems to be perfect to follow the trade marked by Time Warner Cable and Comcast merger. AT&T has been considering buyout deal for the second largest U.S. pay-TV subscriber which could help it increase its wireless spectrum with the arch rival Comcast Corporation.

The Speculation:

All the leading media houses including Reuters, Bloomberg and Wall Street Journal speculates that AT&T Inc. (NYSE:T) could purchase DirecTV (NASDAQ:DTV) anytime soon and complete the deal within the next few weeks. The experts predict that AT&T could offer a deal in the range of $48 billion to $50 billion which translated to $94 to $100 per share of DirecTV stock which yesterday closed at $86.08. DirecTV’s market capitalization is around $43.9 billion and 52 week high of its stock is $89.46.

The Opportunity:

The buyout really makes sense for both the companies and as mentioned while it will give AT&T Inc. (NYSE:T) an edge to maintain competition against Comcast Corp., the deal will also allow DirecTV an opportunity to sell to AT&T at a premium. DirecTV is witnessing stagnate top line growth and declining margins since 4Q12 and it has not been purchasing spectrum unlike its direct competitor DISH Network Corp (NASDAQ:DISH). DISH is also aggressively pursuing T-Mobile US Inc. (NYSE:TMUS) takeover, if Sprint Corporation (NYSE:S) decides not to proceed with the buyout.

Stock Update:

Yesterday, the stock closed at $36.20, around 1% below its previous closing. The stock traded with considerably higher volumes of 34.25 million shares against its 30 day average trading volume of 27.16 million shares.