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

AT&T Inc. (NYSE: T) has filed the S-4 form related to the deal with Time Warner Inc (NYSE: 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.