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AT&T Makes Bid For Time Warner... But If Trump Gets Elected, All Bets Are Off

T | October 24, 2016

According to reports on October 22 on Bloomberg and CNBC AT&T Inc. (NYSE: T) has agreed “in principal” to acquire Time Warner Inc (NYSE: TWX) for $85 billion or about $107 per share.

Albert Fried’s Rich Tullo maintains an Overweight rating on Time Warner, while raising the price target from $90 to $107.

What The Deal Means

“This deal is not about the Media and Technology landscape as it is but about a new frontier that will open as 115 million US homes will not need a cable to get better high speed communications, we call this 5G Mobile,” Tullo mentioned.

Shareholders of Time Warner will receive $53.75 in cash, along with $53.75 in AT&T stock on the completion of the deal.

AT&T expects the deal to be accretive within one year of completion and to generate cost synergies of $1 billion.

Regulatory Approvals

Although consumers are likely to push back on the deal, Tullo expects the merger to have an easier regulatory approval process due to the scale of the acquisition and is unlikely to be dragged out indefinitely by U.S. regulators.

“We suggest China and the EU would be a greater deal risk than the US regulators because the international regulators are capricious and political which why we had a Brexit,” the analyst stated.

What If Trump Wins The Election?

On the other hand, Tullo also pointed out that if Trump gets elected, “all bets are off”, given that Trump seems concerned about CNN and a conflict of interest.

However, the analyst also noted that CNN was not critical to the merger and could be disposed of or spin out the network to the shareholders, “which may make the deal work better from a balance sheet perspective.”

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