AT&T is Close to Agreement to Buy Time Warner

According to Bloomberg, AT&T is close to an agreement to acquire Time Warner for about $86 billion, people with knowledge of the matter said. If it happens, that deal would create a media behemoth that offers TV, wireless, and the content that goes with it.

The bid values Time Warner at about $110 a share - 23 percent more than where the stock closed Friday - and is structured as an even split between cash and equity, said the people, who asked not to be identified because the information is private. If accepted, it would cement the biggest acquisition of the year, surpassing Bayer’s $66 billion takeover of U.S. seed giant Monsanto, announced in May.

Buying Time Warner would give AT&T premium entertainment programming including HBO and the Cartoon Network, which it could offer its millions of pay-TV, mobile phone and Internet subscribers. AT&T CEO Randall Stephenson has been trying to transform the Dallas-based phone company into a media and entertainment giant, and now has one of Hollywood’s top film and TV producers in his cross-hairs.

AT&T is pushing to clinch the blockbuster deal to close the door on other potential bidders, another person with knowledge of the matter said Friday. The phone company made a serious bid for Starz earlier this year, and lost. The premium TV network agreed to a $4.4 billion takeover by Lions Gate Entertainment Corp. in June.

An agreement could be approved today and announced as soon as Monday, according to the people familiar with the matter. Talks are ongoing and a deal could still fall through, the people said.

Talks between the companies accelerated since Bloomberg first reported that executives had met in recent weeks to discuss potential business combinations, according to another person familiar. Part of AT&T’s concern is that other suitors such as Alphabet Inc.’s Google or Apple Inc. could jump in, the person said.

Google and Apple are unlikely to pursue bids for Time Warner, according to people with knowledge of those companies’ strategies.

A merger of AT&T and Time Warner will likely be closely scrutinized by regulators, said Roger Entner, an analyst with Recon Analytics LLC in Dedham, Massachusetts. The Federal Communications Commission’s newer rules have restricted growth for carriers in the telecom world and that has driven them to integrate other businesses like television and media, he said in an interview.