4 Potential Winners If The Time Warner-AT&T Merger Is Approved

Time Warner Inc TWX shares rallied 9.4 percent on Thursday and Friday of last week after AT&T Inc. T announced an $85 billion buyout bid for the company. Despite the $110/share bid price and the late-week rally, Time Warner’s stock is trading around $87 in Tuesday's session.

Why such a significant discount to the bid price? The market seems to have major concerns about the completion of the mega-deal.

Related Link: Netflix's CEO Is In Favor Of AT&T's Merger With Time Warner, But With One Key Condition

Time Warner and AT&T aren’t the only companies that could have a lot riding on the deal’s completion. Here are four other stocks that could benefit if the deal is completed:

• T-Mobile US Inc TMUS: CEO John Legere believes the merger could provide opportunities for T-Mobile. On his company’s earnings call, Legere said that T-Mobile will focus more on wireless acquisitions while AT&T is branching out into media. T-Mobile could also become a potential buyout target itself considering the value of its wireless spectrum.
• Discovery Communications Inc. DISCA: If nothing else, a completed merger could drive the price of cable TV content even higher. That’s good news for Discovery, which owns popular channels such as Discovery Channel, TLC and Animal Planet. With Time Warner off the market, Discover’s quality content coupled with its manageable $10.3 billion market cap could make it the new best takeover target in the media space.
• Twenty-First Century Fox Inc FOXA: Twenty-First Century Fox already tried to buy Time Warner back in 2014 for more than $80/share, but the bid was rejected. AT&T may be forced to divest some of Time Warner’s assets, such as Turner, as part of a conditional merger approval from the FCC and/or the Department of Justice. Twenty-First Century Fox could now end up getting some of the assets they were looking for in 2014 at a fire-sale price.
• Viacom, Inc. VIAB: If the AT&T–Time Warner deal closes, there is a strong chance that the long-rumored CBS Corporation CBS merger with Viacom will finally be completed as well. BTIG analyst Rich Greenfield expects CBS to pay a premium price for Viacom. Viacom’s share price jumped 7 percent on September reports that Sumner Redstone National, a controlling shareholder in both CBS and Viacom, would be calling on the two companies to explore a merger.

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