Sunday, October 23, 2016

AT&T/Time Warner Merger Thoughts

As reported on Friday, AT&T (T) agreed to purchase Time Warner (TWX) for $107.50 per share. The deal brings together a distribution leader in the form of the wireless network operated by AT&T and the content owned by Time Warner.

The deal could be a big victory for the Net Payout Yields model on Covestor where Time Warner has been a long-term holding. The company has long repurchased a large portion of the outstanding stock while paying a decent dividend that recently yielded nearly 2%.

The big question is where the stock will trade on Monday with 50% of the value based on whether AT&T breaks the downside collar. As well, the market will likely fear whether the regulators will approve this merger of mega-media giants.

Ultimately, a decent price on Monday provides an opportune time to exit a long-term position at the top. Here is hoping to a big pop at the start of trading. Below are links to more detailed reports on my opinions on the merger.

WhoTrades
Time Warner Accepts $107.50 Offer

Seeking Alpha
AT&T: Beware Of Another Deal 


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


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