‘at&t To Acquire Time Warner

 Read the news announcement ‘AT&T to Acquire Time Warner’

To perform the following tasks of analysis and write up your finding in a report format: “DALLAS and NEW YORK CITY, Oct. 22, 2016 — AT&T Inc. (NYSE:T) and Time Warner Inc. (NYSE:TWX) today announced they have entered into a definitive agreement under which AT&T will acquire Time Warner in a stock-and-cash transaction valued at $107.50 per share. The agreement has been approved unanimously by the boards of directors of both companies.

Summary Terms of Transaction Time Warner shareholders will receive $107.50 per share under the terms of the merger, comprised of $53.75 per share in cash and $53.75 per share in AT&T stock. The stock portion will be subject to a collar such that Time Warner shareholders will receive 1.437 AT&T shares if AT&T’s average stock price is below $37.411 at closing and 1.3 AT&T shares if AT&T’s average stock price is above $41.349 at closing. This purchase price implies a total equity value of $85.4 billion and a total transaction value of $108.7 billion, including Time Warner’s net debt. Post-transaction, Time Warner shareholders will own between 14.4% and 15.7% of AT&T shares on a fully-diluted basis based on the number of AT&T shares outstanding today. The cash portion of the purchase price will be financed with new debt and cash on AT&T’s balance sheet. AT&T has an 18-month commitment for an unsecured bridge term facility for $40 billion….”

You are encouraged to conduct research on the effects of the news on share price. All related regulatory announcements can be found (as of 13 June 2016) at the following website: http://about.att.com/story/att_to_acquire_time_warner.html 1. Conduct in-depth background research to enhance the analysis of the acquisition event. Such research should demonstrate in-depth understanding on the working of the sector.

You should set up a timeline to reflect the chronicle of events based on key dates. (30%) 2. Conduct comprehensive valuation on Time Warner prior to the acquisition announcement. Your valuation should use relevant valuation technique(s) to arrive at an appropriately discounted present value (per share) for Time Warner and AT&T. (35%) 3. Evaluate the extent of price impacts on Time Warner and AT&T following the news announcements on acquisition. Does the movement of share price reflect the insights from Efficient Market Hypothesis (EMH)? (35%) 4. Timeline: the announcement event occurred on 22 October 2016 and the cut-off time of your analytical timeline is 31 January 2017. Organize your findings in a Report format according to the weight presented. The length should be no longer than 2,500 words. The minimum length of your report should be no less than 1500. You need to provide data and valuation result in Excel format evidence in the appendix. Your Excel model also needs to be submitted via a Moodle Excel Submission Link so that we can comment and verify your model based on your submitted paper. References and appendixes will not be included in the final word count.

Report should include the following:

1. Introduction  in-depth background research to enhance the analysis of the acquisition event
2.  Timeline  to reflect the chronicle of events based on key dates
3. Valuation prior to acquisition  comprehensive valuation on Time Warner prior to the acquisition announcement
4. Analysis of Price Impacts following news announcement on acquisition  investigate share price movement applying the concepts of Efficient Market Hypothesis
5. Conclusion
6. Appendix
7. References