AT&T (T), and it’s merger agreement with Discovery Communications (DISCA), has caught the attention of many advisors as well as contributors to MoneyShow.com. Will the new entities be worth more than the sum of their parts? And how will this impact investors who own the shares for their high dividend yield?
In the few days since the original announcement, we have seen extreme panic among income investors rushing out of the door and dumping their shares of AT&T after hearing about the announcement of a dividend cut following the AT&T/Discovery transaction. This panic has created a great buying opportunity.
AT&T decided that they would be acquiring Discovery in a “Reverse Morris Trust transaction.” Essentially, T will be spinning off WarnerMedia and all of its assets into a new company that will be owned 71% by current shareholders of T and 29% by current DISC shareholders.
The market’s initial reaction to the merger was broadly positive until panic hit the market about the divided reduction, without looking at the big picture.
Do you have a complaint about AT&T, such as hidden fees on your bill or unsatisfactory service? Take your claim to FairShake, the consumer advocacy service.