Judge Approves AT&T's $85BN Takeover Of Time Warner

In a ruling that will please merger arbs and other traders betting on the biggest M&A deal of the year (not to mention a legion of investment bankers), Federal Judge Richard Leon has blocked a DOJ lawsuit intended to scuttle telecom giant AT&T's planned $85 billion buyout of media conglomerate Time Warner - a ruling that could launch a flood of mega-mergers - and in the process defying Trump who repeatedly voiced his displeasure with the merger during his presidential campaign.

Here's a breakdown of Leon's ruling, courtesy of Bloomberg:

  • Leon rejects Justice Dept’s request for an order blocking merger, clearing way for deal that the mobile-phone giant says will fuel its evolution into a media powerhouse.
  • After nearly two years, AT&T is on cusp of completing its acquisition of Time Warner, a deal it struck in bid to become an entertainment giant that can feed Time Warner programming like HBO and CNN to its 119m mobile, internet, and video customers

Leon, who did not impose conditions on the merger's approval, has filled in some important gaps in the case law surrounding so-called "vertical integration" deals,  in which a company makes a bid for a firm that occupies a different level in the supply chain, instead of bidding for a direct competitor. In the past year, more than $118 billion in "vertical" M&A deals have been announced, according to CNBC. With only days left until the deal expires, AT&T has vowed to move quickly to finalize it. Leon advised the government not to seek a stay of the ruling, which could force AT&T to pay a breakup fee, according to Reuters.

The deal will allow AT&T to compete with Internet companies like Facebook and Google in the world of digital advertising.

Almost as important as the decision was Leon's opinion on the government's push to block the merger, as Bloomberg pointed out earlier.

He can rule in AT&T’s favor and deny the government’s request for an injunction, side with the Justice Department and block the deal on antitrust grounds, or rule it illegal, but allow it to go forward by meeting conditions aimed at protecting competing pay-TV companies that want access to Time Warner programming.

The government has suggested an alternative to blocking the deal: requiring AT&T to sell its DirecTV unit or preventing it from acquiring Time Warner’s Turner Broadcasting.

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