All documents here.
- To merge WarnerMedia with Discovery in all-stock, Reverse Morris Trust transaction
- To transfer WarnerMedia to Magallanes (SpinCo, incl $43b debt, to pay special dividend to AT&T, also $15b debt from Discovery, leverage 5x at closing)
- To be separated as dividend or exchange offer
- Next to merge with Drake Subsidiray (= Discovery)
- AT&T shareholders to own 71% stake, Discovery shareholders 29%
- To close mid 2022
- Termination fee if merger not consummated by 230715: Discovery to pay $720m or AT&T to pay $1.77b
- Supported by John Malone and Advance/Newhouse (together own 44% of Discovery)
- New Discovery
- Expect cost synergies 3b $/yr
- To own 200k hr of programming
- CEO David Zaslav to be CEO (Jason Kilar remains CEO of WarnerMedia)
- To deleverage to 3.0x in 24 mo (long-term target 2.5-3.0x)
- Targets 2023: rev $52b (o/w >15b from D2C), adj EBITDA $14b (pro forma 2020: rev 39b, EBITDA 12b)
- AT&T adjusts guidance pro-forma
- Rev CAGR LSD, adj EBITDA CAGR MSD, adj EPS CAGR MSD
- Annual capex $24b (to expand 5G to 200m pops YE 2023, FTTH to 30m premises YE 2025)
- Annual dividend payout ratio 40-43% on anticipated FCF of over $20b
- Leverage 2.6x at closing, <2.5x YE 2023
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