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Time Warner Shares Surge 12% on Report AT&T Could Make Takeover Offer Soon

Friday, October 21, 2016 9:49
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Time Warner logoShares of Time Warner Inc (NYSE:TWX) were up as much as 12% on Friday afternoon, after reports surfaced that the company could receive a buyout bid as soon as this weekend.

Just yesterday, word broke that TWX and AT&T execs had informally discussed a potential merger. Now those talks appear to have intensified, according to a Wall Street Journal report:

AT&T Inc. is in advanced talks to acquire Time Warner Inc., according to people familiar with the matter, a deal that would create a new hallmark in the rapidly converging realms of media, communications and the internet.

A deal, which could happen as early as this weekend, would unite AT&T’s portfolio of wireless, broadband and satellite TV services with Time Warner’s entertainment empire.

Bloomberg added some additional color on how AT&T may finance the acquisition:

With $7.2 billion of cash on hand, AT&T doesn’t have enough firepower to make a big deal with cash alone. In the wake of the DirecTV purchase and the $18 billion it spent in the federal airwave auction last year, AT&T’s net debt was $120 billion at the end of June.

“There’s a lot that’s attractive about Time Warner,” said venerable media industry head Peter Chernin. The company’s portfolio includes HBO, Warner Brothers film and TV studios, CNN, TBS, TNT, and TruTV, among others.

The merger would be the biggest combination of media and distribution companies since Comcast bought NBC Universal back in 2011.

Time Warner shares jumped $9.64 (+11.62%) to $92.63 in Friday afternoon trading, hitting 14-year highs. Year-to-date, TWX has now gained over 42%.


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