US telecoms giant AT&T is to buy entertainment behemoth Time Warner in an $85bn (£69.5bn) takeover, it was confirmed this morning.
The deal will be a combined cash-and-share offer which will see Time Warner investors given $107.50 per share - half in AT&T stock and half in cash. That is a thirty per cent premium on the $80 Time Warner shares were trading at before reports of the possible tie-up broke late last week.
AT&T believes it can save $1bn in cost-cutting within a few years of the deal going ahead, although there are expected to be competition hurdles the pair will have to pass before the mega-merger can be rubber-stamped since AT&T is already the third-largest cable TV provider. Similar deals in the states have required telecoms companies to make commitments that rivals will still be able to access their content through competing platforms.
AT&T, the second largest American mobile phone operator, will get its hands on giant media brands such as HBO, CNN and the Warner Bros studio as part of the deal.
Randall Stephenson, chief executive of AT&T, said: "This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers.
"Time Warner’s leadership, creative talent and content are second to none. Combine that with 100 million plus customers who subscribe to our TV, mobile and broadband services – and you have something really special. It’s a great fit, and it creates immediate and long-term value for our shareholders."