A Recent Filing From AT&T Reveals How The Time Warner Deal Came To Fruition

AT&T Inc. T has filed the S-4 form related to the deal with Time Warner Inc TWX with the US SEC (Securities and Exchange Commission). The filing highlights the background and financials of the deal, while not mentioning any competing bidders, Deutsche Bank’s Matthew Niknam said in a report.

Background And Financials

Niknam listed the timelines of the deal as:

• August 25: AT&T’s CEO Randall Stephenson “expressed interest in exploring a potential combination” of the company with Time Warner, in a meeting with the latter’s CEO Jeff Bewkes. AT&T offered ~$100 per Time Warner share, and Bewkes indicated that the board would require “a meaningfully higher price to pursue such a transaction.”
• September 28: AT&T offers $103 per share in a deal comprising 45 percent cash and 55 percent stock. Bewkes indicated that the board would require a price “well above” that. AT&T raised the offer to $105 per share. Bewkes again noted the board would require “a meaningfully higher value.”
• October 6: The boards of the two companies meet to discuss the revised offer, “other potential acquirers of [TWX], the likelihood that any of them would provide a transaction superior to [...] AT&T,” and “the latitude the [TWX] board would have under a merger with [AT&T] to consider competing proposals.” Time Warner’s board then authorized management to continue talks, seeking to improve the offer price and change the cash/stock ratio to 50 percent.
• October 7: Time Warner proposes $110 per share and a 50 percent cash/stock mix. AT&T mentioned that it had already “improved the offer price significantly,” and it would need to conduct due diligence to consider any further increase.
• October 11: Bewkes and Stephenson agree to a price of $107.50 per share with a 50 percent cash/stock mix and a 5 percent symmetrical collar on the stock component and a payment of $500 million as the break fee in case regulatory approvals were not obtained.
• October 22: Time Warner’s board again discusses “other potential acquirers [...] and likelihood any of them can consummate a transaction superior to [...] AT&T.” The board ultimately moves forward with AT&T’s offer, with a joint release from the two companies being announcing the deal that night.

At Last Check

AT&T was up 1.09 percent at $38.15.
• Time Warner was up 1.09 percent at $92.56.