The giant telecom AT&T and the media group Time Warner have announced on Saturday night the biggest wedding that the business world has known this year, across all sectors. The former hopes to redeem the latter for approximately 85,4 billion , representing a premium of 35% relative to the stock price of Time Warner Thursday, before the spread of the initial rumors .
The new entity will be chaired by the president and CEO of AT&T, Randall Stephenson. The operation sounds, however, as a great victory for the boss of Time Warner Jeff Bewkes : he had received the ire of shareholders for refusing to sell to 21st Century Fox two years ago. He believed that the offer was “ much too low, “ (85 dollars per share). The AT&T is very, very high (107,50 $ per share). It will therefore leave his position with the conviction of having made the right choice.
analysts are divided, however, on the relevance of bring the two giants, from telecoms and media to the other. “I don’t see what AT&T may provide Time Warner, ” said Friday the guru of the media, Barry Diller (IAC). The initiative of Time Warner may seem all the more audacious that he had a very bad experience in the world telecom : in its merger with AOL in 2000, is considered to be one of the worst ever conducted in the United States. The fiasco was such that the two companies have preferred to resume their independence in 2009.
The transaction also raises questions on the side of AT&T (232 billion capitalisation) that has leveraged the recent acquisitions. The one that was only a modest telephone operator ten years ago is now the first telecommunications group in the country by capitalization. But the industry is so consolidated and saturated that it no longer offers little growth prospects. AT&T will, therefore, seek growth elsewhere, in the world of video and media. It has already paid out $ 48 billion last year to buy satellite operator DirecTV. The acquisition of Time Warner is even more revolutionary, since it does directly access the content (HBO, CNN, movies, Warner Bros, etc).
But by dint of acquisitions, the resources of AT&T has become very limited : it only displays 7 billion in cash… and $ 120 billion of debt ! If the buyout of Time Warner is successful, it could soar to around $ 200 billion, which would make AT&T business the most indebted in the world.
The “deal” seems all the more risky as there is a risk of upsetting the competition authorities. The last mega-merger between telecom and media, which had brought together Comcast and Universal in 2009, had already raised strong reservations on their part-without that they were opposed to it as much. the ” I bloquerai the merger if I become president, ” said Donald Trump on Saturday, denouncing the excessive concentration of the media. Hillary Clinton has also promised to be tougher in terms of competition. Given the stakes, the marriage could not take place before the end of 2017…. or even not take place at all.
Lucie Robequain
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