AT&T Inc. (NYSE:T), the second largest wireless carrier in the United States is close to reaching a deal to acquire DIRECTV (NASDAQ:DTV), a satellite television service provider for approximately $50 billion or $100 per share, according to Bloomberg based on information from people knowledgeable about the situation.
The proposed $100 per share acquisition price represents a 29% premium to the closing price of DIRECTV (NASDAQ:DTV) prior to initial reports regarding the negotiations between the two companies on April 30.
The stock price of DIRECTV (NASDAQ:DTV) closed $87.16 per share after the closing of the regular trading, and climbed nearly 6% to $92.35 per share during the extended hours trading in New York on Monday.
According to the people familiar with the discussions, AT&T Inc. (NYSE:T) plans to maintain the current leadership of DIRECTV (NASDAQ:DTV) to run the business operations of the satellite television service provider, which will become its subsidiary. The people also said that DIRECTV CEO Mike White is planning to retire after 2015.
Acquiring the satellite television service provider will strengthen the competitiveness of AT&T Inc. (NYSE:T) by combining it with its phone and broadband internet services. The second largest U.S. wireless carrier will be able to offer its subscribers with a bundle of wireless, high-speed internet, phone, and television services.
According to one of the sources, AT&T Inc. (NYSE:T) and DIRECTV (NASDAQ:DTV) plan to conduct to evaluate the transaction through a 12-month regulatory process.
Last week, Charlie Ergen, chairman of Dish Network Corp. (NASDAQ:DISH) indicated that a merger deal with DIRECTV (NASDAQ:DTV) is logical, but he indicated that pursuing a merger with its competitor will be too expensive for his company.
During a conference call last week, Ergen said, Dish Network Corp. (NASDAQ:DISH) doesn’t have “the kind of money” to outbid AT&T Inc. (NYSE:T) to purchase DIRECTV (NASDAQ:DTV).
AT&T Inc.’s (NYSE:T) proposal to acquire DIRECTV (NYSE:DTV) came after Comcast Corporation (NASDAQ:CMCSA) reached an agreement to buy Time Warner Cable Inc (NYSE:TWC) for $45 billion in stock.
The shares of AT&T Inc. (NYSE:T) closed $36.57 per share today.