AT&T – the second largest wireless operator – is believed to be in the final stages of discussion with DTV and the deal is expected to be between $48 billion and $50 billion. Though the exact deal price is yet to be finalized, AT&T is expected to make a bid between $95 and $100 per DirecTV share. The deal is expected to close in the next couple of weeks, according to a Bloomberg report.
The buyout deal couldn’t have come at a more opportune moment for DirecTV, which has seen dwindling margins and a stagnating top line. Even if the deal is sealed at $95 per DirecTV share (the low end of the expected target price band), it would represent a 10% premium based recent closing prices.
For AT&T, the deal will enable it to integrate its U-verse network with DirecTV’s satellites and provide flexibility in utilizing its broadband speed for delivering content.
Moreover, it seems that the recent Time Warner Cable (TWC) and Comcast Corp (CMCSA) merger has stirred the drive for more such consolidations in the cable television space (read: 3 ETFs to Watch on Comcast-Time Warner Cable Deal).
DirecTV has seen its share price jump around 7% since May 1, when the news of this potential buyout first surfaced. There are chances that DirecTV’s share price might appreciate further, at least close to its expected bid price.
Investors keen on riding the rise in its share price, as well as further consolidation in the space, can play the trend via the ETF route can consider PowerShares Dynamic Media Portfolio (NYSEARCA:PBS), which has the largest exposure to DirecTV.