Cold dish

26 February 2021 By Jennifer Saba Follow @jennifersaba

The U.S. telecom titan is spinning off its pay-TV business in a $16 bln deal, six years after buying it for $67 bln. TPG will share control while kicking in just $1.8 bln for a 30% stake that includes a 10% cash coupon. It’s a pricey way to ease out of a disastrous acquisition.

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AT&T said on Feb. 25 it was spinning off DirecTV and selling a 30% stake in the satellite-television business to buyout firm TPG in a deal that imputes an enterprise value of $16.3 billion. AT&T bought DirecTV in 2015 for $67 billion, including debt.

Under terms of the transaction, AT&T will hold 70% of the common equity in the separated entity, New DirecTV, which also includes its AT&T TV and U-verse video services. TPG is contributing $1.8 billion of cash in exchange for senior preferred equity while AT&T will hold $4.3 billion in junior preferred equity and $4.2 billion in common catch-up equity. The entity also is set to start with $6.4 billion of debt.

The New DirecTV board will have two representatives each from AT&T and TPG with a fifth seat occupied by DirecTV’s chief executive.

After closing, AT&T expects to deconsolidate the new DirecTV company from its financial results.

Goldman Sachs is advising AT&T while Credit Suisse and Bank of America are advising TPG.

Context News

The New DirecTV board will have two representatives each from AT&T and TPG with a fifth seat occupied by DirecTV’s chief executive.

After closing, AT&T expects to deconsolidate the new DirecTV company from its financial results.

Goldman Sachs is advising AT&T while Credit Suisse and Bank of America are advising TPG.

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