The biggest deal of the year could also possibly be the deal with the worst raps as both the Democrats and Republicans agree the merger is a bad idea. The Wall Street joins the chorus as investors are skeptical it won't be the second coming of AOL Time Warner.
When the word of a merger was first heard, stocks of both companies fell with AT&T by 2% and Time Warner by 3%. AT&T is selling for $107.50 per share while Time Warner sells at below $88. This is the very reason why Wall Street believes that the marriage of the two is an unwise move particularly because the $107.50 is 19% higher than Time Warner's and 35% higher than before the news of the merger was out, CNN Money reported.
The investors are worried that AT&T is spending too much money and it wouldn't be financially and strategically significant. It's also reminding some of the failed mergers in the year 2000 specifically between AOL and Time Warner, which was eventually undone after.
Peter Navarro, Donald Trump economic advisor, said that if Trump wins, he would block the takeover because it concentrates too much power in one organization, CNBC reported. Democratic senator Bernie Sanders says if Clinton wins this election, she should "kill" the takeover as it would leave consumers with fewer choices for higher prices.
The merger's aim is to boost Time Warner material on AT&T's network, which could mean that rivals such as Twenty-First Century Fox or Walt Disney could be at a disadvantage. It's the biggest deal of the year what with $85 billion on the line.
There will be a hearing of this sometime in November with the Senate's subcommittee on antitrust. Senator Mike Lee and Senator Amy Klobuchar promised they would carefully review every detail of the acquisition to make sure that consumers' rights are not getting violated.
While lawmakers may approve or disapprove of an acquisition, the go-signal, however, will be coming from the Justice Department, which AT&T believes will get an approval as it's a vertical merger, meaning the companies are not overlapping each other. And vertical mergers such as this one are usually approved by the Justice Department, not only because they strengthen competition, but also because they promote innovation.
