AT&T and TPG Capital – the private equity platform of global alternative asset firm TPG – have signed a definitive agreement under which the two parties will establish a new company named DIRECTV (‘New DIRECTV’) that will own and operate AT&T’s US pay-TV business unit, consisting of the DirecTV, AT&T TV and U-verse services.
TPG will contribute USD1.8 billion in cash to New DIRECTV in exchange for a 30% stake; AT&T will retain 70% of the equity. The transaction implies an enterprise value for the new company of USD16.25 billion. When the transaction closes – which is expected to take place in the second half of 2021 – AT&T expects to receive USD7.8 billion from New DIRECTV (USD7.6 billion in cash and the assumption from AT&T of USD200 million of existing DirecTV debt).
The press release explains: ‘For more than a decade, TPG has been engaged in the evolving landscape of content creation, distribution and consumption, giving it a unique window into consumer preferences that will inform efforts to continue to improve New DIRECTV’s video service to better meet customer needs. The firm has a long history of partnering with corporate owners to invest in and carve-out non-core businesses, providing the capital and operational expertise to uncover new value and execute on long-term growth objectives.’
Vrio, the holding company that operates AT&T’s DirecTV-branded Latin American pay-TV and fixed-wireless LTE operations, is not included in the transaction.