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AT&T discusses changes with Elliott: WSJ
Posted on Friday, 18 October 2019 13:20
AT&T has hired Centerview Partners and Goldman Sachs to weigh options, such as selling or spinning off assets, in order to improve margins and performance, sources told the Wall Street Journal (WSJ). People familiar with the process said the telecommunications powerhouse is working on resolving a campaign launched last month by Elliott Management, which disclosed it had amassed a stake of about 1.0 per cent. The activist investor urged cost cuts and management changes, among other things, and the sources said it has put together a list of potential new directors. An agreement between the two, which have held numerous discussions since Elliott announced it holds a stake, could come as early as this month, according to the WSJ. On 9th September, the activist investor publicly released a letter stating it owns USD 3.20 billion-worth of AT&T shares and outlined ways that could add USD 60.00 or more to the company’s share value by the end of 2021. It took pot-shots at AT&T’s “questionable” mergers and acquisitions strategy that resulted in “severely underperformed expectations”. Examples of the “largest and most damaging” deals included the ill-fated attempt to acquire T-Mobile for USD 39.00 billion and the completed purchases of DirecTV in 2014 for USD 67.00 billion and Time Warner in 2016 for USD 109.00 billion. It called for a full review of the telecommunication giant’s portfolio, which should include a full analysis of the myriad distribution and content assets across wireless, wireline, satellite, film, television and advertising, among others. Elliott said AT&T ought to evaluate all functional areas and business units with a view to focusing on eliminating inefficiency and set up a formal capital allocation framework. Finally, the shareholder called for the addition of, what it termed, qualified directors with specific domain expertise and operating skills. © Zephus Ltd