Handout – AT&T- DirecTV Triangular Merger Problem
Calculations of % Stock Issuance – Subparts (e), (f) and (g) – text pg. 123
Problem 2(e) – text pg. 123:
502,224,444 = # of outstanding DirecTV shares
x
1.724 = exchange ratio/ “floor” on # of AT&T shares to be issued
865,834,941 = minimum # AT&T shares to be issued on effectiveness of merger
16.7% =
865,834,941 = minimum # of AT&T shares to be issued at closing
5,190,509,146 = # of outstanding shares of AT&T stock before closing
502,224,444 = # of outstanding DirecTV shares
x
1.905 = exchange ratio/ “cap” on # of AT&T shares to be issued
956,737,566 = maximum # AT&T shares to be issued on effectiveness of merger
18.4% = 956,737,566 = maximum # of AT&T shares to be issued at closing
5,190,509,146 = # of outstanding shares of AT&T stock before closing
Problem (2)(f) – text pg. 123:
$66.50 ÷ $35.148/“Average Parent Stock Price”
• Which equals 1.891999 AT&T shares –
• Which is then rounded to 1.892 – to provide the Exchange Ratio
Problem (2)(g) – text pg. 123:
1.892/Exchange Ratio multiplied by 502,224,444/# of outstanding DirecTV shares =
•
Which equals = 950,208,648 shares – which is the # of AT&T shares to be issued on
effectiveness of merger