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AT&T is in talks to buy DirecTV for at least $50 billion, and the two sides are actively working toward an announcement, according to several people with knowledge of the matter.
If completed, a deal would give AT&T, the country's second-largest wireless carrier, control of the country's largest satellite television provider, further reshaping the rapidly changing telecommunications and television industries. AT&T has grown interested in DirecTV in recent months, according to several people with knowledge of the company's thinking, leading to an approach in the last few weeks. Rumours of a deal between the two companies have sent DirecTV shares up about 12 percent this month.
On Monday, after The Wall Street Journal reported that talks had accelerated, details on the timing and the price of a deal began coming into focus. The terms of any agreement are not expected to be released in the next two weeks, and the two sides are working on a pricing structure under which AT&T would pay $92 to $94 a share. In addition, Mike White, DirecTV's chief executive, is not expected to step down if the deal goes through.
DirecTV closed at $87.16 on Monday, but was up sharply in after-hours trading.
For AT&T, a deal for DirecTV would signal its continued ambitions to grow in the United States, after its attempted takeover of the rival wireless carrier T-Mobile failed in 2011 because of resistance from regulators.
This year, AT&T was looking to expand in Europe and considering an acquisition of Vodafone, which sold its stake in Verizon Wireless back to Verizon Communications for $130 billion in February.
But AT&T has refocused its attention on the United States market, believing it has an opportunity to expand its footprint in the pay-television business. DirecTV has about 20 million subscribers in the United States. Talks between AT&T and DirecTV began in earnest after Comcast announced its plan to acquire Time Warner Cable. That deal, if completed, would create a clear leader in the cable television industry.
People knowledgeable about both deals said that if AT&T and DirecTV announced a merger, it could complicate the review of Comcast's bid for Time Warner Cable, because antitrust regulators might want to consider both deals simultaneously.
By acquiring DirecTV, AT&T could bolster its small television operations and gain a valuable foothold in Latin America, where DirecTV has about 18 million subscribers.
But several people in the industry said they believed that the ideal target for AT&T would be not DirecTV but its main competitor, Dish Network. Dish, run by the billionaire Charles W Ergen, has amassed a trove of spectrum that could be valuable to AT&T as it seeks to build out its wireless network.
Some investment bankers privately speculated that talks between AT&T and DirecTV were intended to draw Ergen off the sidelines and into the fray. But last week, speaking in a conference call after announcing first-quarter earnings, Ergen said his company was not in a position to make an offer for DirecTV.
"DirecTV would be too frothy for us, for our board to look at, at those kinds of prices," he said.
AT&T is facing renewed competition in the wireless market. Verizon has taken full control of Verizon Wireless, giving it access to additional cash. And Sprint, the third-largest wireless provider, has struck a deal with Japan's SoftBank that will give it added firepower as it seeks to expand. Another deal on the horizon could be Sprint's making an offer for T-Mobile, the fourth-largest wireless carrier, which is just completing its own major purchase. Last year, T-Mobile acquired MetroPCS.
People briefed on the discussions between AT&T and DirecTV said there was no guarantee that a deal would be completed.
AT&T and DirecTV declined to comment.
©2014 The New York Times News Service
WHAT'S THE DEAL?
- AT&T is in talks to buy DirecTV for at least $50 billion
- If completed, a deal would give AT&T control of the country's largest satellite television provider
- For AT&T, a deal for DirecTV would signal its continued ambitions to grow in the US
- This year, AT&T was looking to expand in Europe and considering an acquisition of Vodafone
- DirecTV has about 20 million subscribers in the United States
