AT&T announced late Saturday night that it has agreed a deal to buy Time Warner for $107.50 per share, with Time Warner shareholders getting $53.75 per share in cash and $53.75 per share in AT&T stock.
The deal values Time Warner at $85.4 billion, and makes for a massive payday for the Wall Street banks advising on the deal.
The cash portion of the deal is going to be financed with new debt and cash already on AT&T’s balance sheet.
“AT&T has an 18-month commitment for an unsecured bridge term facility for $40 billion,” the company said in a statement announcing the deal.
The statement added that AT&T expects to “maintain a strong balance sheet following the transaction close and is committed to maintaining strong investment-grade credit metrics.”
“By the end of the first year after close, AT&T expects net debt to adjusted EBITDA to be in the 2.5x range,” the statement said.
AT&T said it expects $1 billion in annual savings within three years of the deal closing, as a result of cutting corporate and procurement expenditures.
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