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Published by:
Ivey Publishing (2019)
Version:
2020-02-04
Revision date:
09-Mar-2020
Length:
11 pages
Data source:
Published sources

Abstract

On October 22, 2016, US telecom operator AT&T Inc and television media giant Time Warner Group announced that AT&T Inc would acquire Time Warner Group for USD107.50 per share, using half cash and half stock, to a total equity value of USD85.4 billion. Although the chief executive officers from both companies were very confident about the future prospects for their shareholders once the transaction was approved and completed, there was much controversy surrounding the acquisition. A portfolio manager with a significant portion of her investment portfolios tied up in AT&T Inc. equity wondered if the price was fair. She needed to make a thorough valuation analysis to ensure that she could anticipate the future value of the merged firm and mitigate any possible loss in value for her investors.

Teaching and learning

This item is suitable for undergraduate and postgraduate courses.

Topics

Discounted cash flow; Mergers and acquisitions; Valuation; Weighted average cost of capital; Finance
Location:
Size:
Large
Other setting(s):
2016

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