AT&T to Sell 30% of DirecTV to TPG Capital

Published on: 26 Feb, 2021

AT&T Inc. (NYSE: T) and TPG Capital have reported the signing of a definitive agreement where AT&T will sell a minority stake of its satellite TV unit DirecTV to TPG Capital in a deal that values that business at USD 16.25 Billion.  DirecTV has an anticipated value of USD 16.25 Billion.  DIRECTV will be jointly managed by a board with two representatives from AT&T and TPG, including a fifth seat for the CEO, at closing will be Bill Morrow, CEO of AT&T’s U.S. video unit.  At the close of the transaction AT&T will own 70% of the common equity and TPG the remaining 30%.

“This agreement aligns with our investment and operational focus on connectivity and content, and the strategic businesses that are key to growing our customer relationships across 5G wireless, fiber and HBO Max. And it supports our deliberate capital allocation commitment to invest in growth areas, sustain the dividend at current levels, focus on debt reduction and restructure or monetize non-core assets,” said AT&T CEO John Stankey. “As the pay-TV industry continues to evolve, forming a new entity with TPG to operate the U.S. video business separately provides the flexibility and dedicated management focus needed to continue meeting the needs of a high-quality customer base and managing the business for profitability. TPG is the right partner for this transaction and creating a new entity is the right way to structure and manage the video business for optimum value creation.”

“Video remains a core service for tens of millions of households. Since its launch in 1994, DIRECTV has continually evolved its product, content and service to provide customers an industry-leading video offering. As video consumption habits evolve, the new DIRECTV will continue investing in its offering to provide value to its customers, including through next-generation streaming pay-TV services,” said David Trujillo, Partner at TPG. “TPG looks forward to partnering with AT&T and new DIRECTV leadership to bring the right focus, attention and execution in support of new DIRECTV’s position as a competitive video provider for the benefit of its customers and employees.”

The Transaction is expected to close within the second half of 2021. Proceeds from this transaction is expected to reduce its debt.

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Marco Zhou

Email: Marco@financialinsiders.com

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