AT&T is buying the media and entertainment conglomerate Time Warner for $85.4bn (£69.8bn) in cash and stock.
The US telecoms giant is paying $107.50 per share – a premium of almost 20% on Time Warner's closing price on 21 October.
The deal, believed to be the largest in the world this year, is subject to review by US regulators.
It pairs AT&T's wireless and TV subscriber base with Time Warner's library of entertainment and media properties, which include cable TV channels HBO, CNN and the Warner Bros film studio.
"This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers," AT&T chief executive Randall Stephenson said in a statement.
"Premium content always wins. It has been true on the big screen, the TV screen and now it's proving true on the mobile screen. We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications."
According to reports, AT&T and Time Warner began merger talks in August. Including Time Warner's debt, the deal has a total transaction value of $108.7bn.
It is bound to be closely scrutinised by federal anti-trust regulators, who only green-lighted Comcast's $30bn buyout of NBCUniversal after imposing numerous conditions.
Republican presidential nominee Donald Trump has said he would block the deal if he is elected.
"As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN – a deal we will not approve in my administration because it's too much concentration of power in the hands of too few," he was quoted as saying by CNN during a speech on 22 October.
If the merger goes through, Stephenson would become the head of the combined company, with Time Warner chief executive Jeff Bewkes staying on for an interim period to help with the transition.
"This is a great day for Time Warner and its shareholders," Bewkes said.
"Combining with AT&T dramatically accelerates our ability to deliver our great brands and premium content to consumers on a multiplatform basis and to capitalise on the tremendous opportunities created by the growing demand for video content.
"This is a natural fit between two companies with great legacies of innovation that have shaped the modern media and communications landscape."
Bewkes turned down an $80bn offer for Time Warner from 21st Century Fox in 2014.