Telecommunications conglomerate AT&T; Inc. announced Tuesday that it plans to spin off WarnerMedia in a $43 billion transaction that will merge AT&T;’s media properties with Discovery Inc.
WarnerMedia owns Warner Bros. Entertainment in Burbank. AT&T; earlier announced plans to shed its media subsidiary, but Tuesday provided financial details of the deal.
AT&T; shareholders will receive an estimated 0.24 shares of Warner Bros. Discovery (WBD) common stock for each share of AT&T; they own. Once the transaction is closed, the shareholders will own 71 percent of the Warner Bros. Discovery company.
AT&T;’s board of directors approved an expected post-close annual dividend of $1.11 per AT&T; share to account for the distribution of WarnerMedia to AT&T; shareholders.
The post-close annual dividend was also approved to size the annual dividend payout at approximately 40 percent of projected free cash flow to enable investment in growth opportunities, according to a statement.
“Rather than try to account for market volatility in the near-term and decide where to apportion value in the process of doing an exchange of shares, the spin-off distribution will let the market do what markets do best,” AT&T; Chief Executive John Stankey said in a statement. “We are confident both equities will soon be valued on the solid fundamentals and attractive prospects they represent.”
The transaction is expected to close in the second quarter of this year.