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DirectTV's Buyout: With Little Strategic Value, Why is AT&T Buying the Satellite TV Juggernaut?

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
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 


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Related Tickers

12/31/1969 7:00 PM
DTV $0.00 Down +0.00 +0.00%
DirecTV CAPS Rating: ***
T $32.82 Up +0.50 +1.55%
AT&T CAPS Rating: ****