DirecTV Stock Surges on Reports

Journal Says AT&T Merger Could Be Announced in Two Weeks

DirecTV shares rose nearly 6% ($4.94 each) in after hours trading Monday after a report in the Wall Street Journal claimed the satellite giant could announce a deal with telco AT&T in the next two weeks.

The Journal first reported that AT&T had approached DirecTV about a possible deal on May 1, adding that the talks were preliminary. Those discussions apparently heated up quickly, with the paper saying the two are talking about a cash and stock deal that could value the satellite giant between $45 billion and $50 billion.

A report in Bloomberg News late Monday said AT&T could pay as much as $100 per share for DirecTV, a nearly 30% premium to its Monday close. Bloomberg said the current scenario being discussed would be for DirecTV to be run as a separate unit of AT&T under current management with chairman and CEO Mike White retiring after 2015.

DirecTV stock closed at $88.51 per share on Monday, down 85 cents each or 1%. But the shares surged in after hours trading after the Journal story broke – it was trading at $92.10 per share, up $4.94 each or 5.7% at 5:01 p.m.

An AT&T DirecTV merger would create a 26-million subscriber video powerhouse to rival that of another pending media mega-merger – Comcast’s $69 billion takeover of Time Warner Cable, which would create a combined entity with about 30 million customers.