AT&T agrees to a deal with activist shareholder

CNN Wire

AT&T has ended its battle with Elliott Management, agreeing to make substantial changes to its oversight to avoid a high-stakes fight with one of the world’s most successful activist shareholders.

In its deal, Elliott Management said AT&T agreed to separate the CEO and chairman roles once current CEO Randall Stephenson steps down. Although Stephenson has not announced when or if he would leave the company, many investors have speculated the time may be getting near: He recently appointed WarnerMedia CEO John Stankey as the company’s president and chief operating officer, making him the heir apparent to become chief executive once Stephenson leaves. (WarnerMedia is CNN’s parent company.) AT&T said Monday Stephenson would stay on through at least 2020.

According to Elliott, as part of the deal, AT&T pledged not to make any more large acquisitions like WarnerMedia or DirecTV. Those deals cost tens of billions of dollars and made AT&T one of the world’s most highly leveraged companies. It is actively working to pay down its enormous debt load.

AT&T has not publicly commented on some of the specific terms of the deal.

The deal would give Elliott the opportunity to name two new directors once current board members step down. And AT&T agreed to meet certain profit targets, including earning $4.50 to $4.80 per share by 2022. That’s more than the $3.60 to $3.70 per share AT&T expects to earn this year.

Elliott Management controls funds that own $3.4 billion worth of AT&T’s stock, or about 1% of the company. Elliott announced its large stake in September, outlining demands for the company’s management.

“Our thinking has also benefited from our engagement with our owners, including Elliott Management,” said Stephenson in a statement in . “These are smart people who very much appreciate the opportunity we have to create tremendous shareholder value.”

In a statement, Elliot Management Partner Jesse Cohn and Associate Portfolio Manager Marc Steinberg commended AT&T for making “positive steps.”

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