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Groundbreaking Deal Opens The Mega-Merger Floodgates

Cash

After a six-week trial to determine fate of the biggest merger in history, a federal judge has greenlighted AT&T’s $85.4-billion acquisition of Time Warner.

But perhaps more significantly, the ruling is a harbinger of what is to come: A potential wave of corporate takeovers that will now feel emboldened by this green light from the anti-trust semaphore.

In his ruling, U.S. District Court Judge Richard Leon said that Justice Department failed to prove that deal would lead to fewer choices for consumers and higher prices for television and internet services.

The judge also urged the government not to seek a stay if it appeals, which could delay or scupper the merger.

Last November, the U.S. Justice Department sued to block deal, saying it would hurt competition and consumers end up footing the bill. Government lawyers argued that bills could rise by as much as $400 million annually, or 45 cents per month per consumer.

Those claims were denied by AT&T and Time Warner, who argued that the merger would be good for consumers. During the trial, even the government's own expert estimated that the merger would allow AT&T to reduce the cost of DirecTV for customers by $352 million.

The case was widely seen as the antitrust "trial of the decade."

Back in October 2016, hot on the campaign trail, Trump made it clear that he wouldn’t approve what was then a proposed merger between AT&T and Time Warner. And with this in mind, when the government announced that it would try to block the merger, speculation was rife that it was motivated by Trump’s dislike of CNN, which is owned by Time Warner and which is repeatedly labelled “fake news” by the president. Related: The $60 Billion Name Change Dice Roll

In a statement following the late Tuesday ruling, Time Warner called out Trump, suggesting that he had influenced the Department of Justice’s decision to bring the case, saying “… this was a case that was baseless, political in its motivation and should never have been brought”.

So what happens now?

Other potential deals were certainly eyeing the outcome of this mega-merger as a barometer for what’s going to slip by anti-trust in the future.  

The next big deal that will grab attention following this AT&T victory is the Disney to buy Fox’s entertainment business. Disney might see an anti-trust path cleared for its desired acquisition of Fox now, but anti-trust isn’t the only challenge Disney has in this deal.

This mega deal is being tested by Disney rival Comcast, which is seeking to thwart the takeover and scoop up both Fox and British Sky. Comcast is planning to top Disney’s bid of $52 billion, and come in with a $60-billion offer. And Tuesday’s ruling on AT&T-Time Warner was reportedly the moment it was waiting for. Some are even expecting the move today.

Fox initially rejected Comcast’s bid, even though it was higher, due to UK anti-trust issues.

Eyes will also be on Comcast’s $31-million bid for British Sky—but this deal is being considered by European Union regulators, who are set to decide this week on whether it will pass or be pushed to the courts.

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CBS and Viacom are working on a merger.

Even the healthcare industry will be celebrating the Tuesday mega-merger ruling. A series of healthcare companies have announced planned mergers, including CVS Health’s announcement that it would buy insurance giant Aetna for $77 billion.

Walmart is also said to be considering an acquisition of the health insurer Humana, which currently has market value of $37 billion. And in April, Cigna confirmed that its proposed $52 billion acquisition of Express Scripts Holding.

By Damir Kaletovic for Safehaven.com

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