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The discussion of AT&T to buy DirecTV has progressed and a deal is expected to happen within the next two weeks, according to the latest report from The Wall Street Journal.
Quoting few sources that are quite familiar with the matter, the WSJ stated that AT&T is about to use a combination of stock and cash to acquire the renowned TV company. And this acquisition is expected to come at a premium cost of about $50 billion, according inside sources. As of Monday, the market value of DirecTV stands at about $45 bln.
DirecTV would be handled by the current management as a part of AT&T, as suggested by the report also quoting several unnamed sources. The CEO of DirecTV is planning to retire from his post 2015.
Officially, DirecTV and AT&T declined to give any comments on the deal. However, earlier it was reported that DirecTV is being paid around $100 each share by AT&T and it will run and manage the company as its own unit. Wall Street Journal stated that the deal might be finalized over the next two weeks.
The shares of DirecTV grew by 6% to a good $92.50 on Monday in extended trading hours. A recent report also suggested that DirecTV is working along with advisers, including Goldman Sachs Group so as to come up with a great combination regarding the takeover approach from AT&T.
“This is not the first time that AT&T and DirecTV have danced around the fire and thought if they could give it a go” stated Recon Analytics analyst, Roger Entner.
“They both looked at each other for at least 10 years. Both kind of came to the conclusion that it was in the right environment. It makes a lot of sense to get together, but there was never the right regulatory environment for it.”
Entner also explained that a Comcast-Time Warner Cable merger might turn up and call for a counterweight, which more likely would be AT&T-DirecTV. He also added that this merger would make more sense for DirecTV considering decline of the satellite TV in recent times.
“They both see the Grim Reaper at the horizon. DirecTV hasn’t gone out and bought spectrum. Dish has, so DirecTV needs to find a partner, and AT&T is that partner,” he said.
A few investors have also guessed about the potential tie-up of DirecTV with some smaller rival Dish Networks.