According to a survey conducted by Bernstein (via Benzinga), most buy-side analysts expect the deal between AT&T (T) and Time Warner (TWX) to eventually obtain approval. An amazing 84% of the participants in the survey expect AT&T to close the deal, yet Time Warner trades far below the $107.50 offer price.
The stock now trades $20 below the offer price with AT&T only trading slightly below the deal collar. Have to agree with Todd Juenger of Bernstein that the stock would trade closer to $100 now if the market believed the deal would obtain regulatory approvals.
Despite a lot of political positioning, the vertical deal doesn't involve competitive issues. For these reason, Time Warner is worth the risk of holding until a more reasonable price can be obtained for the stock.
AT&T: Beware Of Another Deal
Disclosure: Long TWX. Please review the disclaimer page for more details.