Via Financial Times

AT&T have reached a broad truce with the activist investor Elliott Management in a deal based around a “three-year action plan” that will put the company’s assets under review and reconfigure its board.

The steps agreed by the US telecoms and media group include the ground rules for eventually appointing a replacement Randall Stephenson, the chief executive, and a target to reach $4.50 to $4.80 earnings per share by 2022.

The end to hostilities with Elliott, one of the most feared activist investors, will be a big relief to executives of the Texas-based company, which fought off calls for management changes and immediate disposals of assets such as DirecTV.

Elliott, which built a $3.4bn stake in AT&T, “commended” a three-year plan it described as creating “substantial and enduring shareholder value at one of America’s greatest companies”.

AT&T’s management is facing an important test of its strategy to move into the content and pay-TV business with the $80bn takeover of Time Warner and $67bn acquisition of DirecTV, which left it saddled with a $162bn debt pile.

As well pressing AT&T to justify takeover of the group now called WarnerMedia, the hedge fund raised questions about the future of John Stankey, the chief operating officer and likely heir to Mr Stephenson.

AT&T said Mr Stephenson will remain at the helm “through at least 2020”.

Elliott said they had agreed a “clarification of leadership best practices” when a successor to Mr Stephenson is chosen, including a promise to separate the chairman and chief executive roles and evaluate “all potential CEO candidates”. Two new directors will also be added to the board.

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Addressing calls to slim down its business, the company said it would “actively review” its portfolio, aiming to dispose of $5bn to $10bn of “non-strategic assets”.

It is the second time a detente has broken out this year involving Elliott and the telecoms sector. In March, a bitter and long-running dispute between the US fund and Vivendi over the future of Telecom Italia’s board make-up and strategy was resolved at the eleventh hour ahead of a shareholder vote. The two investors have proved to be more collaborative since, despite vicious personal barbs being traded in the run-up to the vote.