(RepublicanInformer.com)- AT&T, one of the biggest telecommunications companies in the United States, announced on Tuesday that it will spin off its WarnerMedia company as part of a $43 billion transaction. The aim is to combine its media properties under the Discovery Inc. company.
AT&T also cut its dividend roughly in half.
Current AT&T shareholders will own 71% of the Warner Bros. Discovery company and will also be given 0.24 shares of Warner Bros. Discovery for every AT&T share that they already own. The deal will also see AT&T dilute 7.2 billion shares once the transactions are complete.
AT&T head John Stankey and other members of the board have been exploring options to unload WarnerMedia for some time.
The announcement resulted in an immediate 4.2% drop in the value of AT&T shares on Tuesday.
The merger with Discovery is expected to close in the second quarter of this year. Current Discovery CEO David Zaslav will head up the new media operation.
The $43 deal is a sign that business is not doing too great. AT&T bought Time Warner for almost $85 billion.
However, the deal was effectively necessary as it will pay off roughly one-third of the $156.2 billion in debt that AT&T had racked up by the end of last year.
And as one of the most heavily debt-laden companies in the country right now, it’s a drastic move that was ultimately necessary.