Over the weekend the long rumored buyout of satellite television provider DirecTV (NASDAQ:DTV) by communications juggernaut AT&T, (NYSE:T) was formalized. According to the terms of the agreement, shareholders of DirecTV are entitled to receive $28.50 per share in cash and the equivalent of $66.50 per share in AT&T stock for a total consideration of $95 per share. The move represents a major change in an industry just adjusting to the pending merger of Comcast and Time Warner Cable. That merger essentially represents a merger of peers, with both parties operating in the cable television industry. The benefits of such a merger are obvious, including operational cost savings and an increased geographic footprint for the combined company. The benefits of the proposed merger between DirecTV and AT&T are less obvious, leading some Wall Street analysts to claim the merger doesn't make sense and has little strategic value. Motley Fool Consumer Goods Analyst Sean O'Reilly explains the benefits of AT&T's acquisition of DirecTV and what it means for Foolish investors.
Your cable company is scared, but you can get rich
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Sean O'Reilly has no position in any stocks mentioned. The Motley Fool recommends DTV. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.