AT&T said it will spin off WarnerMedia in a $43 billion deal to merge its media holdings with Discovery and also cut its dividend by nearly half.
AT&T shareholders will own 71% of the new Warner Bros. Discovery company and will receive 0.24 Warner Bros. Discovery shares for each AT&T share they own. AT&T will have 7.2 billion diluted shares outstanding upon closing.
The US telecommunications group will pay a dividend of $1.11 per share, down from $2.08 per share. This figure is at the lower end of the range of between $8 billion and $9 billion that AT&T had previously forecast.
In pre-market trading, AT&T shares were down 5%.
The deal to unravel AT&T’s $85 billion purchase of Time Warner was announced early last year, but some financial details were not disclosed until today.
“Instead of trying to account for short-term market volatility and deciding where to spread the value in the process of doing a stock trade, the spin-off spread will let the market do what the markets do best,” he said. AT&T Chief Executive John Stankey in a statement.
“We are confident that both stocks will soon be valued based on the strong fundamentals and attractive prospects they represent,” he added.
Warner Bros. Discovery will try to get closer to the biggest player in the world of video streaming, Netflix, even though WarnerMedia’s HBO Max grew faster in the United States in the fourth quarter, ending the year with 74 million subscribers.
