Pascal Desroches told an investor conference that the telcom giant keeps expecting the transaction will close during the first half of 2022.
One open question is what form one step of the merger will take. AT&T will transfer WarnerMedia to a newly-formed corporation dubbed “Spinco” and will distribute shares of Spinco to its shareholders by way of a pro-rata dividend, an exchange offer or a combination of the two. If a spin-off is chosen, shares of the new company will be distributed to existing shareholders; if a split-off is chosen, shareholders would have to choose between the stock of the new company or AT&T.
Desroches said a final decision on that and what to do with the $43 billion in cash that AT&T will get in the deal will be made closer to its closing with a focus on optimizing shareholder returns. “If we believe that the remaining connectivity business is undervalued, it may suggest that we should do a split,” he said. “If on the other hand we think that the media business … is undervalued, it may lean more toward a spin.
AT&T has been in deal mode in recent months. In May, it agreed to the media mega-merger of entertainment arm WarnerMedia with Discovery after agreeing to sell a 30 percent stake in its pay TV business to private equity firm TPG, which closed a little bit faster than originally expected. The company also unveiled a deal to sell Vrio, the Latin American arm of DirecTV, to Grupo Werthein, based in Argentina.
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