AT&T to Acquire Time Warner

billion and the merge was approved in 2017. This report will then give a detailed research on the background of the companies and a timeline of the key events regarding the merge will be given. AT&T is an American multinational company. It is the largest in the world when it comes to telecommunications. This company is the second largest when it comes to the provision of telephone services in United States and the largest in the providence of fixed telephone. The merging of these two companies formed the AT&T Mexico. In 2015, it purchased the DirecTV together with its assumed depts. in accordance to several conditions. In the year2016, it was reported that the AT&T was in talks about merging with the Time Warner. This merge would help in AT&T have important possessions in the media industry.

HBO programing includes the airing of the feature films, HBO documentaries, originals programming and sports. E. g. the Game of Thrones. The Turner broadcasting system operates on the international news, animations, young adult and kids’ media shows and business related news. March 15th 2017 The European commission approved the merge August 22nd, 2017 The Mexican authorities approved to the merge September 5th 2017 The Chilean authorities also approved to the merge and the US was the last country needed to approve. The cost of capital of the company will be calculated by the weighted average cost of capital that combines cost of equity together with the cost of debt. The cost of equity will represent the required return on equity will be calculated by CAPM. The main component will be measuring its risks which will be systemic.

Time warner was valued at $85. trillion in free cash flow. According to Bloomberg (2018), the enterprise value together with the terminal value totaled up to $93,492,407,809. This however would lead to a reduction in the DCF valuation which would have a final count on the estimated value of equity at $69,023,715,809. and would reflect the value of the time warner shares at the moment. for calculating the long-term terminal growth rate of 3. Market returns ca be graded as weak, semi strong and strong. Weak market efficiency The weak market efficiency is comprised of the current shares prices. It is obtained by calculating the movement of the share prices and this is used to predict the cost of the prices in future. The weak market efficiency of the study will involve an evaluation of the following; amalysing the duration since the start of the announcement when the information of the acquisition was given to the market upto 10 days prior and after the announcement.

A regression analysis was done on whether the current prices of the shares would show how weak the market was as well as identify some on the correlations. Random performance therefore was not experienced in the company. Semi strong market efficiency This efficiency is also used in producing data accurately as compared to the weak form. In this test the annual reports are used and indicated the take of the public to such announcements The semi strong test of efficiency is tested by the increase and decrease of the prices needed to analyse the abnormal returns. The Time Warner results will be examined to check whether there were abnormal returns that were different from zero after the announcements. Hypothesis test The t-test needed to be tested and the expected result was to be different from zero.