IB Net Payout Yields Model

Analysts Optimistic On AT&T-Time Warner Deal

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.

Other research:
AT&T: Beware Of Another Deal

Disclosure: Long TWX. Please review the disclaimer page for more details. 


Anonymous said…
Hi Mark,
Feels more vertical then horizontal since the content and delivery are separate lines of business coming together here.
Mark Holder said…
Yes, meant vertical and typed horizontal.

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