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from Breakingviews:

AT&T puts shareholders on hold for DirecTV

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

AT&T is putting its shareholders on hold to buy DirecTV. Its $67 billion acquisition of the satellite TV operator announced on Sunday brings with it an unexpectedly robust $1.6 billion of cost savings. Even so, these don’t quite cover the cost of the premium. In any case, AT&T says it will use the money to roll out rural broadband service. Customers and regulators are getting the first call.

A little more than three years after AT&T launched an eventually torpedoed $39 billion bid for T-Mobile US, it has found another acquisition target big enough to match its ambitions. Instead of expanding in domestic cellular, though, the $190 billion company led by Randall Stephenson is aiming to marry video and broadband as the competitive landscape for television and internet service reshapes for the mobile and digital era.

The deal math suggests AT&T is paying over the odds for its quarry. The synergies AT&T expects from the deal, mainly from cheaper TV programming, amount to a present value of roughly $10 billion. The $95-a-share purchase price represents 30 percent more than where DirecTV stock was trading in late March before a news report indicated it might be bought. So the $11.2 billion premium exceeds the value of the savings.

In what looks like a bid to appease regulators, though, AT&T is pledging to use the money saved to provide high-speed internet service to 15 million locations mostly outside urban areas. Much of it will probably be fixed wireless, which is slower than fiber but also much cheaper to install.

from Breakingviews:

AT&T deal dialing emits a shaky signal

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

AT&T’s deal dialing is emitting a shaky signal. First, it wanted T-Mobile US for more domestic subscribers. After regulators nixed the idea and Verizon cleaned up its wireless joint venture, AT&T pursued Vodafone for European growth. Now, amid U.S. pay-TV consolidation, DirecTV or Dish beckons at home. The rationale is questionable and suggests the broader strategy is wayward.

The $190 billion company’s desire for a large-scale deal is understandable. AT&T’s revenue increased just 2 percent last year. Europe appealed because of a technology gap related to wireless speeds that AT&T theoretically was in a position to fill. The overseas market caught on, though, and the logic behind a foray there dissipated just as quickly.

from Breakingviews:

Rob Cox: The worry now is a brewing M&A bubble

By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Stop worrying about the tech bubble – there may be an even bigger one inflating beyond the confines of Silicon Valley. The corporate urge to merge has gone into global hyper-drive this year. Deal activity has surged as investors egg companies on and bid up the shares of acquirers well beyond mathematical explication, or prudence. As new metrics from interested parties are trotted out to justify the irrational, it’s time to exercise caution.

So far this year companies have announced some $1.3 trillion worth of transactions around the world, according to Thomson Reuters data. That’s nearly double the level of activity a year ago. European corporations have fueled even greater increases. Much of this is pent-up demand and a delayed response to the past year’s remarkable runup in stock market values.

from The Great Debate UK:

“Week of Action” on arms trade treaty

John Duncan - John Duncan is the United Kingdom Ambassador for Multilateral Arms Control and Disarmament. He comments regularly via Twitter and on his own Blog. The opinions expressed are his own. -

Former United Nations Secretary General Kofi Annan once remarked that in terms of people killed and injured every day, conventional weapons are the worst weapons of mass destruction in the 21st century.

Monday sees the start of a “Week of Action” to generate support for a new International Arms Trade Treaty, organised by NGO alliance "Control Arms" which brings together Amnesty International, Oxfam and IANSA.

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