Today’s Research Reports on Stocks to Watch: AT&T and Time Warner

AT&T shares plummeted while Time Warner shares saw green on Wednesday, a day after a federal court Judge declared that the companies’ intended merger was legal.  

RDI Initiates Coverage on:

AT&T Inc.

Time Warner Inc.

AT&T Inc. shares closed down 6.20% on Wednesday despite the victory the company had on Tuesday, winning approval to acquire Time Warner Inc. Federal Judge Richard Leon had said on Tuesday that the company’s $85.4 billion purchase of Time Warner is legal and did not impose any conditions on the approval of the merger. AT&T General Counsel David McAtee commented, "We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government’s lawsuit to block our merger with Time Warner." He added, “We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative." Assistant Attorney General Makan Delrahim said, "We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner. We will closely review the Court’s opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers." Trading volume for AT&T at 195 million shares yesterday was significantly higher than the stock’s average trading volume of about 29.3 million shares.

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Time Warner Inc. shares closed up nearly 2% on Wednesday as traders cheered the approval of the company merging with AT&T. It was on Tuesday that a federal court ruled in favor of AT&T’s acquisition of the company. U.S. District Court Judge Richard Leon approved the merger and remarked on the innovation that could arise from the two companies combining. He wrote, "AT&T and Time Warner expect to see the gains in innovation — particularly by way of a new programmatic advertising platform — that motivated the merger in the first place." He also added, "The parties have waged an epic battle, under extremely restricted deadlines, to litigate and try this historic vertical merger case." He remarked, "I hope and trust that the Government will have the good judgment, wisdom, and courage to avoid such a manifest injustice. To do otherwise, I fear, would undermine the faith in our system of justice of not only the defendants, but their millions of shareholders and the business community at large." Nearly 62 million shares of Time Warner were traded yesterday compared to the stock’s average trading volume of around 5.5 million shares.

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Our Actionable Research on AT&T Inc. (NYSE: T) and Time Warner Inc. (NYSE: TWX) can be downloaded free of charge at Research Driven Investing.

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