Introductory Note.
As previously announced, on May 17, 2021, AT&T Inc., a Delaware corporation (“AT&T”), and Magallanes, Inc., a Delaware corporation and wholly owned subsidiary of AT&T (“Spinco”), entered into certain definitive agreements with Discovery, Inc., a Delaware corporation (“Discovery”), and Drake Subsidiary, Inc., a Delaware corporation and wholly owned subsidiary of Discovery (“Merger Sub”), including an Agreement and Plan of Merger (as amended, the “Merger Agreement”), in connection with the planned transactions involving the separation of the WarnerMedia business from AT&T followed by the combination of WarnerMedia with Discovery (the “Transactions”). Following the completion of the Transactions, holders of the shares of AT&T common stock will own approximately 71% of the outstanding capital stock of Discovery, which will be renamed Warner Bros. Discovery, Inc. (“WBD”), on a fully diluted basis (computed using the treasury method).
Under the terms of the Merger Agreement, as of the closing of the Transactions (the “Effective Time”), the board of directors of WBD (the “WBD Board”) will consist of 13 directors, consisting of six directors designated by Discovery (including the Chief Executive Officer of WBD as of immediately after the Effective Time) and seven directors designated by AT&T (including the director who will serve as the Chairperson of the WBD Board). As of the Effective Time, the WBD Board will be classified into three classes designated as Class I, Class II and Class III.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
In connection with being designated by AT&T to serve on the WBD Board as of the Effective Time, Samuel A. Di Piazza, Jr., Debra L. Lee and Geoffrey Y. Yang will resign from their respective positions as directors of AT&T effective as of immediately following the Effective Time, subject to and conditioned upon the occurrence of the consummation of the Transactions and being appointed to the WBD Board.
The information set forth under the Introductory Note of this Current Report on Form 8-K is incorporated into this Item 5.02 by reference.
| Item 7.01 | Regulation FD Disclosure. |
On March 15, 2022, AT&T issued a press release announcing the individuals designated by AT&T to serve on the WBD Board effective as of the Effective Time. A copy of the press release is furnished as Exhibit 99.1 hereto and, along with the information set forth under the Introductory Note, is incorporated herein by reference.
The information in this Item 7.01, including the exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing by AT&T under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.
Statement Concerning Forward-Looking Statements
Information set forth in this communication, including any financial estimates and statements as to the expected timing, completion and effects of the proposed transaction between AT&T, Spinco, and Discovery constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These estimates and statements are subject to risks and uncertainties, and actual results might differ materially. Such estimates and statements include, but are not limited to, statements about the benefits of the transaction, including future financial and operating results, the combined Spinco and Discovery company’s plans, objectives, expectations and intentions, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the management of AT&T and Discovery and are subject to significant risks and uncertainties outside of our control.
