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James Li
James Li
Articles (1532) 

AT&T Set to Close Merger With Klarman's Time Warner

Federal judge opens the door for more mega-mergers in telecom and entertainment sectors

U.S. District Court Judge Richard Leon announced on Tuesday that AT&T Inc. (NYSE:T) has court approval to complete its $85.4 billion acquisition of Time Warner Inc. (NYSE:TWX), a major holding of Baupost Group manager Seth Klarman (Trades, Portfolio).

AT&T general counsel praises court decision

AT&T first announced the merger on Oct. 22, 2016, a deal that combines Time Warner’s “vast library of content” and ability to create premium content with the Dallas-based telecommunication services company. In a statement, General Counsel David McAtee praised the federal court for giving a “thorough and timely examination of the evidence.” McAtee also said the company expects to close the merger by June 20 to begin giving customers “more affordable, mobile and innovative” entertainment.

Court ruling opens the door for similar mergers

CNBC columnist Sara Salinas said the court ruling can “spur a wave” of mergers in the entertainment and telecom sectors, including Walt Disney Co.’s (NYSE:DIS) pending merger with Twenty-First Century Fox Inc. (NASDAQ:FOXA)(NASDAQ:FOX). Comcast Corp. (CMCSA) announced on May 23 that it is in advanced stages of preparing an all-cash offer premium to Disney’s.

GuruFocus’ industry overview page for entertainment companies lists Netflix Inc. (NASDAQ:NFLX), Disney and Fox as the largest three companies in terms of market cap. Time Warner comes in fourth with an 11.8% industry weight, as Figure 1 illustrates.

Figure 1

Court ruling affects stock prices for not just AT&T and Time Warner

As of 11:40 a.m., AT&T’s stock price declined 4.31% from its previous close of $34.35 while Time Warner’s climbed 3.18% from its previous close of $96.22.


Fox’s Class A and Class B shares both increased over 7% from the previous close on the court ruling while Disney increased 2.9%.


Disclosure: No positions.

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