AT&T announced that its board has decided to spin off the telco’s interest in WarnerMedia — rather than structure the media conglom’s divestiture as a split-off. The transacti…
The transaction will spin off 100% of AT&T’s interest in WarnerMedia to AT&T’s existing shareholders in a pro-rata distribution, followed by the merger of WarnerMedia withto form a new company, “Warner Bros. Discovery.” The deal is expected to close in the second quarter of 2022; previously, AT&T had targeted “mid-2022” for the close.
“In evaluating the form of distribution, we were guided by one objective — executing the transaction in the most seamless manner possible to support long-term value generation,” Stankey said in a statement Tuesday. “We are confident the spin-off achieves that objective because it’s simple, efficient and results in AT&T shareholders owning shares of both companies, each of which will have the ability to drive better returns in a manner consistent with their respective market opportunities.
AT&T and Discovery first announced the WarnerMedia deal in May 2021. Under the terms of the transaction, which is structured as an all-stock, Reverse Morris Trust transaction, AT&T will receive $43 billion and AT&T’s shareholders will receive stock representing approximately 71% of the new Warner Bros. Discovery. Existing Discovery shareholders will own approximately 29% of the new company on a fully diluted basis.
Following the closing of the transaction, the WBD common stock is expected to be listed on the Nasdaq Global Select Market under the ticker “WBD.” In connection with the transaction, all classes of shares of Discovery capital stock will be converted and reclassified into common shares of WBD with one vote per share. AT&T will continue to trade on the NYSE under the ticker “T.”
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