Will DOJ Lawsuit Sink AT&T-Time Warner Merger?
In light of the uncertainty arising from a court case, we are lowering our expectation that the merger closes from 75% to 50% and decreasing our fair value for Time Warner.
As previously rumored, the Department of Justice filed a lawsuit to block the merger of
Management at AT&T began mounting a PR campaign against the DOJ well before the lawsuit to block the merger was filed. We expect that AT&T will continue to fight the lawsuit in the public square and will attempt to discover evidence that President Trump and/or other officials influenced the DOJ’s decision. Another argument that we expect the firm to continue to use is that this is a vertical merger, instead of a horizontal merger that would remove a competitor from the marketplace. This argument leans on recent antitrust precedents under which the DOJ has settled for smaller divestures and behavioral remedies to offset any potential future anticompetitive behavior as in the 2011 Comcast-NBCUniversal merger.
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