>>> AT&T to spin off interest in WarnerMedia to its shareholders at closing of p

AT&T to spin off interest in WarnerMedia to its shareholders at closing of previously announced transaction with Discovery (DISCA)
  • Co announced that its board of directors has determined to spin off AT&T's interest in WarnerMedia in connection with the previously announced transaction with Discovery, Inc (NASDAQ: DISCA, DISCB, DISCK). The transaction, which will spin off 100% of AT&T's interest in WarnerMedia to AT&T's existing shareholders in a pro rata distribution, followed by the merger of WarnerMedia with Discovery, is expected to close in the second quarter of 2022.
  • Additionally, AT&T's board of directors approved an expected post-close annual dividend of $1.11 per AT&T share, to account for the distribution of WarnerMedia to AT&T shareholders and to size the annual dividend payout at approximately 40% of projected free cash flow1 to enable investment in attractive growth opportunities.
  • As previously disclosed, under the terms of the transaction, which is structured as an all-stock, Reverse Morris Trust transaction, AT&T will receive $43 billion (subject to working capital and other adjustments) in a combination of cash and other consideration, and AT&T's shareholders will receive stock representing approximately 71% of the new company, Warner Bros. Discovery, Inc. (WBD), on a fully diluted basis. Existing Discovery shareholders will own approximately 29% of the new company on a fully diluted basis.
  • Following the closing of the transaction, the WBD common stock is expected to be listed on the NASDAQ Global Select Market under the ticker "WBD." In connection with the transaction, all classes of shares of Discovery capital stock will be converted and reclassified into common shares of WBD with one vote per share. AT&T will continue to trade on the NYSE under the ticker "T."
AT&T shareholders will benefit after close from:
  • Ownership of approximately 71% of WBD, a leading global media company with a broad portfolio of brands that's well positioned to be a global direct-to-consumer leader. WBD will combine WarnerMedia's premium entertainment, sports and news assets with Discovery's leading nonfiction and international entertainment and sports businesses to create a premier, standalone global entertainment company.
    Attractive expected annual dividend of $1.11 per AT&T share, or about $8 billion in aggregate, reflecting a target payout ratio in the first full year after close of 40%.
  • Consistent with AT&T's guidance when it announced the transaction in May 2021, the expected annual dividend per share is being changed from $2.08 to $1.11 to account for the distribution of WarnerMedia to AT&T shareholders and support AT&T's plans to step-up investment in its growth areas of 5G and fiber.