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David Kass
David Kass
Articles (9)  | Author's Website |

Berkshire Hathaway's $2 Billion Stake in AT&T

July 27, 2015 | About:

On July 24, 2015, AT&T (NYSE:T) completed its $49 billion acquisition of DirecTV (NYSE: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.

About the author:

David Kass
David I Kass
Tyser Teaching Fellow, Department of Finance
Ph.D., Harvard University

Robert H. Smith School of Business
4412 Van Munching Hall
University of Maryland
College Park, MD 20742-1815
Phone: 301-405-9683
Email: [email protected]

Dr. David Kass has published articles in corporate finance, industrial organization, and health economics. He currently teaches Advanced Financial Management and Business Finance. Prior to joining the faculty of the Smith School in 2004, he held senior positions with the Federal Government (Federal Trade Commission, General Accounting Office, Department of Defense, and the Bureau of Economic Analysis). Dr. Kass has recently appeared on Bloomberg TV, CNBC, Maryland Public Television, Business News Network TV (Canada), and WYPR Radio (Baltimore), and has been quoted on numerous occasions by Bloomberg News, where he has primarily discussed Warren Buffett and Berkshire Hathaway. He has also launched a Smith School “Warren Buffett” blog. Dr. Kass has accompanied MBA students on trips to Omaha for private meetings with Warren Buffett, and Finance Fellows to Berkshire Hathaway’s annual meetings. He is an officer of the Harvard Business School Club of Washington, DC, and is a member of the investment and budget committees of a local nonprofit organization. Dr. Kass received a Smith School “Top 15% Teaching Award” for the 2009-2010 academic year.

Visit David Kass's Website


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