AT&T Inc. detailed its plans for the WarnerMedia spinoff on Friday, with investors eventually expecting to receive a share of the new streaming entity for every four AT&T shares they own.
is in the process of spinning off its WarnerMedia business in association with Discovery Inc. DISCA,
which executives believe would allow AT&T to refocus attention on core telecommunications efforts. The company expects the deal to close in April and executives have announced plans for a stock dividend to its investors for April 5 at the close of business.
AT&T explained in a Friday statement that those who hold AT&T stock at the end of trading on April 5 will be able to receive shares of WarnerMedia SpinCo representing 100% of AT&T’s stake in the company. Following the closing of the transaction, expected in April, investors will receive approximately 0.24 shares of the new WarnerBros. Discovery for every AT&T share they own.
See also: AT&T issues new guidelines as WarnerMedia spin-off nears
The shares created represent approximately 71% of WarnerBros. Discovery, which will trade under the symbol “WBD” after the spin-off ends. Shareholders “need not take any action” because SpinCo shares will be automatically exchanged on the closing date of the transaction, the company said.
The potential period between the stock dividend and the closing of the deal could be confusing for anyone looking to buy or sell the stock. The company noted that between April 4, the trading day before its derivative distribution record date, and the closing of the combination with Discovery, there will be two markets for AT&T common stock on the New York Stock Exchange. .
Those who choose to sell a share of AT&T common stock through the “normal” market will sell both the AT&T stock and the right to receive WarnerBros. Discovery actions through the transaction. Those who participate in the “ex-distribution” market will sell AT&T stock while retaining the right to receive WarnerBros. Discovery actions.
Additionally, in the two-way trading window, those who wish to hold AT&T stock while selling the right to receive WarnerBros. Discovery may use a temporary option upon issuance which will be available on Nasdaq.
Although AT&T stockholders will still hold the same number of AT&T shares after the deal closes as they held just before the deal closes, the company’s stock price is expected to adjust once the transaction concluded, reflecting the benefits.
AT&T’s board also declared a second-quarter dividend of 27.75 cents per share, the first quarterly dividend in a reduced annual payout executives announced last month. The dividend will be payable on May 2 for shareholders of record on April 14.