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Business

Time Warner merger could still fall apart if AT&T wins suit

By
Josh Kosman
Published June 7, 2018
Updated June 7, 2018, 11:01 p.m. ET

Even if Judge Richard Leon next week allows AT&T’s $85 billion acquisition of Time Warner, the telco can still end up a loser.

President Trump’s Department of Justice, if it loses its lawsuit to stop the mega-merger, could appeal and ask for a stay — a delay that could stop the deal from closing for four to six months while an appellate court ponders a decision, legal experts said.

And that could be enough to rock the deal off its foundation, sources said, as the merger agreement expires on June 21.

Leon is expected to rule on June 12. A ruling against the merger would guarantee to kill the deal — and cast a chill on the many other mergers and acquisitions lining up to gain antitrust approval.

While a DOJ appeal of an adverse ruling is nearly a sure thing, winning a stay is not a certainty. In the last seven antitrust appeals in merger cases, the government has won significant-enough stays to delay the underlying merger three times, according to a recent Bank of America analysis.

That includes in 2000, when emergency relief was granted to the Federal Trade Commission in its suit to stop HJ Heinz from buying Beech-Nut, according to the BofA analysis.

Six of those seven were FTC cases — and not a DOJ case like the AT&T fight is — and the standard for getting a stay in a DOJ case is higher.
Whether Trump’s regulators could get a stay pending appeal in the AT&T case is a matter of some debate, sources familiar with the case told The Post.

When asked if the Justice Department would appeal or try to issue a stay if the judge does not rule in the government’s favor, the department’s antitrust chief, Makan Delrahim, played coy.

“That will be an option — we’ll have to review and see what the judge writes,” Delrahim told The Post on Thursday at The Deal’s 2018 Corporate Governance Conference in New York. He declined to discuss the matter further.

If the DOJ loses the AT&T case but wins a stay on appeal, there is a 50-50 chance the deal could fall apart before the appellate argument is even heard, according to the analysis, which was prepared for Bank of America hedge fund clients and reviewed by The Post.

Of course, Time Warner may just threaten to walk, in hopes of winning a higher price from AT&T, one source close to the situation maintained.
AT&T should have to pay more because the deal, which is going on two years, is taking so much time to clear — and Time Warner could attract a higher offer from other potential suitors, the source said.

AT&T announced its deal to buy Time Warner in October 2016.

That being said, Chief Executive Randall Stephenson’s AT&T is paying $107.50 per share, and Time Warner shares have traded mostly in the $92-to-$97 range this year.

Time Warner shares rose 49 cents, to $95.37, on Thursday.