As AT&T (NYSE: T) circled DirecTV (NASDAQ: DTV) in the nearly year-long runup to its $49 billion buyout proposal of the satellite pay TV operator, rival satellite operator Dish Network (NASDAQ: DISH) was also heavily involved through the later stages of the bidding process, not bowing out until just before the deal with AT&T was announced in May.
On Tuesday, DirecTV filed a detailed report to the Securities and Exchange Commission, outlining the tango that led up to the company's agreement with AT&T. Dish Network is not specifically named in the report--rather, the third party is referred to as "Company A," a direct competitor to DirecTV with large wireless spectrum holdings. (Process of elimination, anyone?)
According to the filing, the dealmaking process kicked off in July 2013, when AT&T CEO Randall Stephenson contacted DirecTV chief executive Michael White and broached the idea of a potential merger. Both parties agreed to assess the prospects for regulatory approval, but AT&T ended the dialog in September for reasons that aren't made clear in the SEC document.
Several months later, the chairman of Company A, presumably Charlie Ergen, also met with White to talk merger. The two sides signed confidentiality agreements, and Company A outlined the deal. But no formal proposal was ever rendered.
Talks with both Dish and AT&T were revived shortly after Comcast (NASDAQ: CMCSA) agreed to buy Time Warner Cable (NYSE: TWC) in February. By April, DirecTV had hired Goldman Sachs to advise it on a possible transaction.
AT&T moved quickly to gain access to DirecTV's operational data and perform its due dilligence. And on April 22, it made an initial offer of $85 a share, but was informed that it would have to come up to the "upper $90s" in order for a deal to occur.
Company A dropped out of the bidding in early May, citing the relative price levels of the two company's stock. Four days later, AT&T rendered another offer of $93.50 a share, which was also rejected.
DirecTV asked Goldman Sachs to end deal talks at this point, but Stephenson and White subsequently spoke and came to an agreement on $95 a share. The deal was announced May 18.
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