AT&T to Acquire Time Warner

Document Type:Coursework

Subject Area:Finance

Document 1

7billion 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.

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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. This led to the creation of the AT&T Mexico. February28th, 2017 Ajit Pai, the chairman of the Federal Communications Commission announced that the deal would not be revealed by his agency and the Department of justice was left to do the reviewing. July 2015 The AT&T company purchased the DirecTV for $48. 5 and it even agreed to pay the assumed depts. under certain conditions of their own.

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The main component will be measuring its risks which will be systemic. Time warner was valued at $85. 4 billion Time warner would experience risk since it would be a business deal. These risks include the risks of the merger would disrupt the management of the from finalizing on the ongoing business operations, they would not realize the benefits or the losses that would come from the merger and finally, the stakeholders of time Warner would not accept the merger agreement. Therefore, the market risks of time warner would be greatly affected by the acquisition. 11 and would reflect the value of the time warner shares at the moment. for calculating the long-term terminal growth rate of 3. 33% was an assumption on the GDP of the firm.

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Efficient market hypothesis. This chapter will analyze the impact that was brought by the acquisition to the Time Warner mostly on the price of the share. 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. To show whether there were AR that continued after the announcement, a durblin-watson test was carried out to show the autocorrelation and test the random walk hypothesis.

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