AT&T Blockbuster Pushes Record M&A Run to Cusp of $2 Trillion

The value of mergers and acquisitions is on course to pass the $2 trillion milestone in record time this year, boosted by the blockbuster spinoff of AT&T Inc.’s media business.

AT&T said Monday it will merge its WarnerMedia business with Discovery Inc. in a surprise reversal for a company that spent $85 billion to acquire the assets less than three years ago. The transaction values the combined entity at about $130 billion including debt, based on WarnerMedia’s estimated enterprise value of more than $90 billion.

AT&T Blockbuster Pushes Record M&A Run to Cusp of $2 Trillion

The deal, first reported by Bloomberg News, is comfortably the largest to be announced globally in 2021, topping transactions such as AerCap Holdings NV’s roughly $30 billion deal for General Electric Co.’s aircraft-leasing arm and a planned $30 billion takeover of railway operator Kansas City Southern.

It adds to $1.8 trillion of deals already agreed this year, according to data compiled by Bloomberg. That’s now up more than double on the amount at this point in 2020 and the most for any corresponding period on record, the data show.

AT&T Blockbuster Pushes Record M&A Run to Cusp of $2 Trillion

M&A is up across all major sectors, as companies rebound from the economic shocks of the global Covid-19 pandemic with a fresh appetite for growth through dealmaking. Few industries have seen transaction values rise as much as technology, media and telecommunications.

TMT deals valued at about $670 billion have been announced since the start of January, more than triple the tally for this point a year ago, the Bloomberg data show. Landmark telecom transactions include Rogers Communications Inc.’s $16 billion acquisition of Canadian rival Shaw Communications Inc.

AT&T Blockbuster Pushes Record M&A Run to Cusp of $2 Trillion

AT&T will receive $43 billion under the terms of the Discovery deal, with its shareholders going on to own 71% of the new company’s stock, according to a filing Monday. The combined company is expected to generate revenue of about $52 billion in 2023 and adjusted earnings before interest, taxes, depreciation and amortization of about $14 billion.

AT&T Blockbuster Pushes Record M&A Run to Cusp of $2 Trillion

LionTree LLC and Goldman Sachs Group Inc. advised AT&T, while Allen & Co. and JPMorgan Chase & Co. worked with Discovery. Perella Weinberg Partners also provided advice to Discovery’s independent directors.

©2021 Bloomberg L.P.

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