On July 24, 2015, AT&T (NYSE:T) completed its $49 billion acquisition of DirecTV (NASDAQ:DTV). Under the terms of the merger, DirecTV shareholders received 1.892 shares of AT&T common stock and $28.50 in cash, per share of DirecTV. Since Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) owned 31.4 million shares of DirecTV as of March 31, 2015, that holding converts into 59.4 million shares of AT&T valued at approximately $2 billion at AT&T’s closing price of $34.29 on July 24. In addition, Berkshire Hathaway receives approximately $900 million in cash. Each share of DirecTV is, therefore, being valued at $93.38.
In his 2012 letter to shareholders, Warren Buffett (Trades, Portfolio) said that DirecTV was a combined purchase of Todd Combs and Ted Weschler. When this deal was announced in May 2014, Messrs. Combs and Weschler issued a joint statement: “This is a terrific transaction for all involved: Enhanced choice for consumers, coupled with increased value for both AT&T and DirecTV shareholders – a natural.” The two portfolio managers built Berkshire’s stake in DirecTV beginning in 2011 at an average cost of about $60 per share. Continue Reading »