An unlikely winner from the AT&T-Time Warner determination — CVS Well being

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Cameron Costa | CNBC

Larry Merlo, CEO of CVS and Mark Bertolini, CEO of AETNA seem on Squawk Field on Dec. 4th, 2017.

Shares of drugstore CVS Well being jumped Wednesday, a day after a federal decide determined to allow AT&T’s bid for Time Warner in what many on Wall Road are contemplating a tacit go-ahead for different so-called vertical mergers.

The ruling might clear potential roadblocks forward of the $69 billion tie-up between CVS and well being insurer Aetna, a deal confirmed by the businesses in late 2017; shares of CVS at one level climbed 2.5 % in premarket buying and selling Wednesday.

Although the end result within the six-week AT&T trial will undoubtedly encourage a wave of deal-making within the media and telecommunications industries, it would additionally probably facilitate future vertical mergers, whereby one firm mergers with one other in its provide chain.

“U.S. District Court docket Decide Richard Leon dominated that AT&T’s acquisition of Time Warner is authorized and didn’t impose situations on the merger’s approval, which we predict bodes effectively for CVS’ pending acquisition of Aetna,” Cowen’s Charles Rhyee stated in a word.

The Division of Justice sued to dam the media deal, claiming that AT&T, proprietor of satellite tv for pc tv supplier DirecTV, may abuse its market share by charging rival distributors extra for Time Warner content material and thereby hurt customers.

“Given the favorable ruling of the AT&T/Time Warner merger, we anticipate shares of CVS to commerce up tomorrow, in addition to shares of ESRX [Express Scripts] which is being acquired by CI [Cigna],” the Cowen analyst stated within the word Tuesday.

CVS Well being expects the deal to shut within the second half of 2018.

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