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Pro Analysis

Time Warner-AT&T deal more likely to go through under Trump, analyst says

Randall Stephenson, chairman and chief executive officer of AT&T, left, speaks while Jeffrey Bewkes, chairman and chief executive officer of Time Warner, listens during a conference in Laguna Beach, California, October 25, 2016.
Patrick T. Fallon | Bloomberg | Getty Images
Randall Stephenson, chairman and chief executive officer of AT&T, left, speaks while Jeffrey Bewkes, chairman and chief executive officer of Time Warner, listens during a conference in Laguna Beach, California, October 25, 2016.

Contrary to what the market thought just after the election, MKM Partners' Eric Handler told investors President-elect Donald Trump's likely regulatory appointments actually increase the chances AT&T's proposed acquisition of Time Warner will pass government scrutiny.

After Trump's upset victory, Time Warner shares traded lower for a few days because the candidate said he was against the merger. However, the stock rebounded and is now up 4 percent since the Nov. 8 election as of Monday's close.

"AT&T's proposed acquisition of Time Warner likely has a higher probability of getting approved given the impending power shift in Washington, D.C.," Handler wrote in a note to clients Tuesday.

"We now view the likelihood of AT&T/Time Warner getting approved as a 70/30 proposition based on a recent expert discussion we held."

The 70 percent probability of the merger's passage is in stark contrast to Handler's Oct. 23 Time Warner note where he wrote, "The deal ... will face a very tough regulatory review. Approval is not a certainty and could very well get denied."

Handler's picks have a 16 percent one-year average return and a 79 percent success rate for a profit, according to analyst ranking service TipRanks. That places him in the top 2 percent of all Wall Street analysts covering any industry.