Donald Trump Vowed to Block Deal
Odds of a successful merger between Time Warner Inc (NYSE:TWX) and AT&T Inc. (NYSE:T) seem to be shrinking now that Donald Trump is the President-elect of the United States.
The plan for turning a major American cable provider into a media conglomerate was entirely dependent on getting approval from antitrust authorities. Analysts think AT&T is less likely to get approval now because Trump has explicitly said he would block the deal.
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On the same the day that AT&T CEO Randall Stephenson announced the $85.0-billion merger, Trump gave a speech in Gettysburg, Pennsylvania voicing his dissent. (Source: “Donald Trump vs. AT&T: A Signal Test of How Business Will Fare in New Washington,” The Wall Street Journal, November 16, 2016.)
“It’s too much concentration of power in the hands of too few,” Trump said, calling the merger “an example of the power structure I am fighting.”
Rumor has it that AT&T officials in Washington DC are concerned about how a Trump administration will lean on the merger, particularly since he singled out the deal.
In general, analysts expect a deregulatory stance from the Trump administration, but his vehement opposition to the AT&T deal is considered too specific to backtrack on. To be sure, the company spends nearly $16.0 million a year on lobbying, so it is possible that Trump could shift his views in time.
But, in the meantime, investors are likely going to express their skepticism by driving down the price of T stock. They have remained wary of the deal since its announcement more than a month ago.
Even when Hillary Clinton seemed like she had the election sewn up, markets were still bearish on the potential union.
Despite these hurdles, AT&T executives don’t plan to change course. They want to wait out the two months or so until Trump gets into office and see which direction he will take. An early indication would probably be who he chooses for Attorney General and that person’s disposition toward corporate mergers.
Credits: Flickr.com/Mike Mozart
In the meantime, Stephenson is doing his best to soften the relationship.
“We support president-elect Trump’s agenda of economic growth, investment in infrastructure and rational regulation,” he said on Wednesday in a written statement. “We look forward to presenting how our Time Warner transaction supports that agenda for the benefit of consumers.”
