On July 24, 2015, AT&T (T, Financial) completed its $49 billion acquisition of DirecTV (DTV, Financial). 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 (BRK.A, Financial) (BRK.B, Financial) 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.
