Slim Agrees to Buy AT&T Stake in America Movil for $5.6 Billion

Jun 28, 2014 1:01 am ET

June 28 (Bloomberg) -- Billionaire Carlos Slim will buy out AT&T Inc.’s stake in America Movil SAB for $5.57 billion, propping up his Latin American mobile-phone company’s stock price as his longtime partner from the U.S. exits the business.

Slim’s holding company, Inmobiliaria Carso, told America Movil’s board it will acquire AT&T’s 8.3 percent stake, which includes 24 percent of the company’s voting shares, according to a filing yesterday. AT&T will receive $4.57 billion at the close of the sale and another $1 billion within 60 days of the closing, the Dallas-based company said in a separate filing.

AT&T is selling its holdings of Slim’s company after a 24- year relationship to avoid a conflict of interest because the company is buying DirecTV, which competes with America Movil for pay-TV customers across Latin America. AT&T expects to report a gain of 8 cents to 10 cents a share from the sale of its holding in America Movil.

America Movil shares leapt 3.6 percent to 13.29 pesos in Mexico City, the biggest one-day gain in 11 months and the highest closing price since May 6. If AT&T had sold the stake in the open market, it could have reduced the value of America Movil shares by making them less scarce. Through June 26, the shares had drifted about 3 percent lower since AT&T announced the DirecTV acquisition on May 18.

“America Movil recognizes the great value that the AT&T partnership produced for both parties in these more than 20 years,” Slim’s company said.

More Cash

For AT&T, the deal provides more cash as the phone company completes its $48.5 billion takeover of DirecTV, the largest satellite-TV company in the U.S. AT&T has said that $7 billion of the cash it planned to use for the acquisition would come from the sale of assets including the America Movil stake.

Separately, AT&T said yesterday it has an agreement to sell as much as $2 billion in receivables to a group of banks led by Citigroup Inc. Through the arrangement, AT&T sold $1.6 billion in future installment payments for devices in exchange for about $800 million in cash, with the additional balance to be collected over time, according to a filing.

The arrangement won’t change cash-flow forecasts for this year, AT&T said. Last month, Sprint Corp. agreed to sell as much as $1.3 billion in receivables to a group led by Bank of Tokyo- Mitsubishi UFJ Ltd.

AT&T is also expecting to raise $2 billion from the sale of its assets in Connecticut, expected to close by the end of this year.

$68.8 Billion

Slim, 74, and his six children already control about half of America Movil through personal holdings, a family trust and Inmobiliaria Carso. As of yesterday’s close, America Movil made up about half of Slim’s $68.8 billion fortune, according to the Bloomberg Billionaires Index, making him the world’s second- richest person, trailing Bill Gates.

America Movil, based in Mexico City, operates in 18 countries in the Western hemisphere and holds stakes in European phone operators in the Netherlands and Austria. With the backing of AT&T, Slim got into Mexico’s telecommunications business by acquiring control of former state monopoly Telefonos de Mexico in a 1990 privatization sale. America Movil was spun off a decade later and eventually acquired its former parent.

If it gets regulatory approval to acquire DirecTV, AT&T will be getting a 41 percent stake in Sky Mexico, the nation’s largest satellite-TV company. Grupo Televisa SAB, Slim’s biggest rival, owns the rest of Sky Mexico. DirecTV and America Movil also compete in Brazil and Colombia.

“Carlos and I have spoken and he is a very dear friend, but now he’s going to be a competitor,” AT&T Chief Executive Officer Randall Stephenson said last month on a conference call. “And we recognize that and off we go.”

--With assistance from Scott Moritz and David De Jong in New York, Patricia Laya in Mexico City and Blake Schmidt in Sao Paulo.