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AT&T Inc.’s share price up, acquires DirecTV for 48.5 billion dollars to join the pay-TV competition in the U.S.

AT&T Inc. and DirecTV made an official statement yesterday, revealing that the two companies are planning to merge. The cash-and-stock purchase of DirecTV is estimated at about 48.5 billion dollars and will bring AT&T more than 38 million video subscribers in the U.S. and in Latin America, turning the company in one of the main players on the pay television arena.

As reported by the Wall Street Journal, Mr. Randall Stephenson, who is the current Chief Executive Officer of AT&T Inc. said in an interview: “There would not be many people who could put together something with a nationwide mobile platform, nationwide video platform and a 70 million household broadband build.”

The deal was approved by the two parties boards on Sunday and follows the news that Comcast Corp. and Time Warner Cable Inc. have agreed to merge. According to the companies statement, the price that is to be paid by AT&T Inc. for each share of DirecTV, amounts to 28.50 dollars in cash and the equivalent of 66.50 dollars in stock. The discussions were often on-and-off, but have recently made some progress.

Nevertheless, the agreement between AT&T and DirecTV is to face regulatory approval, which according to some analysts would not be difficult to obtain, especially if the merger between Comcast Corp. and Time Warner Cable Inc. is approved. The acquisition of DirecTV is considered beneficial to AT&T, which explained that 70 million customer locations will be covered by the companys high-speed broadband network. On the other hand, DirecTV has been pressed to find a partner in order to strengthen its presence on the market, because it doesnt have a phone service of its own.

The Chief Executive Officer of DirecTV – Mr. Mike White commented the announcement of the purchase in a telephone interview, which was cited by Bloomberg: “Randall and I have had a relationship for a number of years. Over the last year, things began to change with technologies – AT&T started to be able to offer more broadband and better broadband. With it comes a continuing evolution for mobile video.”

The acquisition is the largest purchase of AT&T since 2006, when it bought BellSouth in a 85-billion-dollar deal.

AT&T was 0.60% up to close at 36.74 dollars per share yesterday, marking a one-year change of -1.71%. According to the information published on CNN Money, the 23 analysts offering 12-month price forecasts for AT&T Inc. have a median target of 35.00, with a high estimate of 42.00 and a low estimate of 25.00. The median estimate represents a -4.74% decrease from the last price of 36.74.

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