If approved, the deal gives AT&T access to DirecTV’s 40 million digital TV customers in the US and Latin America.
The deal would also give AT&T a new source of revenue beyond its traditional telecommunications business.
The board of directors at both companies have approved the merger.
However, the deal is subject to approval by DirecTV shareholders, and needs to be reviewed by US regulators, including the Federal Communications Commission and the Department of Justice.
Both companies are hopeful the transaction will complete in about 12 months.
AT&T chairman and chief executive Randall Stephenson said in a statement: “This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens – mobile devices, TVs, laptops, cars and even airplanes.”
DirecTV is a leading pay TV provider in the US and Latin America. Meanwhile AT&T is a telecommunications provider and it boasts of a nationwide mobile network and a high-speed broadband network, which the company says will cover 70 million customer locations, with the broadband expansion enabled by this transaction.
DirecTV’s premier content includes exclusive pay TV rights to NFL Sunday Ticket which gives subscribers access to every American football game played on Sunday afternoons, which they can view on TV, laptops and mobile devices.
Under the terms of the merger, DirecTV shareholders will receive $95 per share, comprising $28.50 per share in cash and $66.50 per share in AT&T stock.
AT&T intends to finance the cash portion of the transaction through a combination of cash on hand, sales of assets and loans.
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