The arbitrageur's case for AT Time Warner shares

cheap Canada Goose A hurricane of criticism has engulfed the AT Warner deal, with Wall Street mostly opposing it for the usual reasons when huge mergers are announced. The skeptics believe, first, that government regulators won approve it, and, second, canada goose outlet in usa that AT (T) is overpaying by a large margin for Time Warner (TWX). cheap Canada Goose

canada goose deals Morningstar analyst Michael Hodel estimates that AT is paying about billion more for Time Warner than what it is worth on a stand alone basis. He figures that equal to $2.90 per AT share. Since he skeptical of the strategic benefits of combining content ownership canada goose outlet store new york and distribution, Hodel says he likely lower his AT value estimate to around $35 a share, once canada goose parka outlet he finishes sifting through the details. canada goose deals

canada goose clearance That just about where AT is trading now, down from $38 a few days ago when canada goose outlet store toronto deal news emerged. A year ago, the stock was trading at around $43 on its own steam. But for the long term investor, AT valuation has become attractive precisely because of it latest initiative to something. before the Time Warner deal, equity analyst Angelo Zino at CFRA Research (formerly S Capital IQ) had recommended AT as a buy. He put a price target of $46 on the shares, encouraged by what he described as expansion, new integrated mobile/entertainment product canada goose outlet store quebec offerings and strategic business services growth. the deal became public, Zino became even more bullish, listing several for the phone giant acquisition of Time Warner that argued strongly against all the criticism it has attracted. canada goose clearance

canada goose store feel that AT made the deal to make sure it was well positioned ahead of the powerful shift canada goose outlet factory that will see more millennials change how they watch content, Zino pointed out. canada goose store

canada goose black friday sale It will be in nature for AT said Zino, and could pave the way for more consolidation within the media and communication space. are three positives Zino sees: canada goose black friday sale

Canada Goose Jackets Diversification. He believes http://www.mycanadagoosejacket.org the Time Warner acquisition offers some opportunity for AT to diversify away from its core canada goose outlet in canada business. canada goose outlet store near me The combination could lead to new growth opportunities and more canada goose outlet price expansion through offerings (OTT, or TV programming delivered over the internet), canada goose premium outlet the analyst noted. Canada Goose Jackets

canada goose coats Ownership of attractive content. The deal gives AT access to Time Warner media content and, more important, the ability to create new premium content that connects with the canada goose outlet germany company pay TV subscriber base, wireless subscribers canada goose outlet new york and broadband distribution. Time Warner attractive brands include CNN, HBO, TNT, TBS, Warner Bros. International and Cartoon Network. Owning them will allow AT to become more and move much faster when offering customers new premium content on its canada goose clothing uk network. canada goose coats

buy canada goose jacket cheap Mobile canada goose outlet in uk video. AT will be better positioned to meet fast changing trends in mobile video, canada goose outlet washington dc which accounted for just over half canada goose outlet nyc of local mobile data traffic in 2015. But that expected to jump 75 percent by 2020. So Zino said it imperative for AT to expand its OTT offerings over the next decade given the rise of cord cutters (people who abandon cable in favor of OTT services), and could help accelerate a new avenue canada goose outlet mall of growth. Time Warner storehouse of content is a big part of the answer. AT leading wireless network, combined canada goose outlet jackets with Time Warner history of content generation, offers a very compelling proposition, said the analyst. buy canada goose jacket cheap

Canada Goose Parka The big negative that opponents of the deal raise is the prospective canada goose outlet london jump in leverage in canada goose outlet houston AT balance sheet. Cash requirements of more than $40 billion related to the acquisition, coupled with Time Warner net debt position of about $22 billion, will add considerable weight to AT already hefty $126.8 billion total debt. Canada Goose Parka

Canada Goose Outlet And, of course, the union will need government blessing. Zino believes it will gain regulatory approval but that AT will need to accept a slew of conditions to ensure that it isn getting an unfair competitive advantage. But this canada goose outlet store uk is canada goose outlet michigan a integration, and he noted that the regulators haven rejected canada goose outlet 80 off such arrangements. Canada Goose Outlet

canada goose clearance sale AT expects the deal to add to earnings in the first year after it closes, with anticipated annual cost canada goose outlet usa synergies of $1 billion within three years. see potential of the combination to unlock a new revenue stream over time, said Zino. After one year, the deal is expected to show net debt to adjusted EBITDA of around 2.5 times, said Zino, and he sees the deal modestly improving the dividend coverage ratio. Currently, the AT dividend yield is a canada goose jacket outlet uk hefty 5.12 percent. canada goose clearance sale

Canada Goose sale AT stock should command a higher canada goose outlet official price as the deal approval becomes imminent. Here the strange thing about arbitrage and arbitrageurs: When a deal is rejected, the stock also attracts buyers because that means the acquiring company won have to add that much leverage or debt. So the stock often goes back up. Canada Goose sale

buy canada goose jacket After initially rising on the announcement, shares of Time Warner are down to $88 now, from as high as $92 when the deal news leaked. But its canada goose outlet england stock is also attractively valued, precisely because of the deal with AT Research maintained its recommendation on Time Warner stock after the deal was announced, with a price target of $100 a share. That above the stock 52 week high of more than $94. So for the optimists, shares of Time Warner, like those of AT are attractively canada goose outlet authentic valued because of the deal even though it is possible that the regulators may totally reject it. buy canada goose jacket

canada goose coats on sale For the long term investors rather than the savvy short term professional canada goose outlet location traders shares of both AT and Time Warner are opportunities that should be canada goose outlet toronto factory taken advantage of as soon as possible. If you buy at their currently discounted prices, you win because chances are good the deal will get approved, and the stocks will swing higher. canada goose coats on sale

canada goose And if it rejected, they also should spring upward because of the critics argument that they fare better as independent companies. And maybe Time Warner canada goose outlet will receive an even sweeter offer from another company. For AT the field of potential acquisitions is now unlimited, given its new role as an active and serious buyer and no longer just a stodgy telecom giant canada goose.