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Shares of AT&T (T) and BellSouth (BLS) are two of the few high volume stocks to fair moderately well in today’s otherwise ugly session. One potential reason: reports that AT&T might be willing to drop its pending acquisition of BellSouth rather than meet concessions being requested by the FCC or sought by some members of Congress who are concered about the proposed combination.

BroadbandReports.com today links to an item written on Friday by industry analyst David Burstein on DSLPrime.com which specifically suggests that AT&T might be willing to throw in the towel. Burstein writes that “[AT&T CEO] Ed Whitacre is willing to let the BellSouth deal die, a sensible move given the price has gone up $17 [billion] since March when the deal was announced and $29 [billion] since January.”

Burstein says his belief that Whitacre would be willing to let the deal die stems from logic, rather than any internal source: He writes that it was “obvious” that some of the company’s “favorite” Congressmen would lose; that Whitacre could have cut a deal in September “for a fraction” of the $6 billion his company’s market cap has lost since the election; that “only someone stupid wouldn’t have moved hard defore the election, and similarly now”; and that “Ed Whitacre isn’t stupid.” Ergo, he concludes: “Whitacre is willing to risk the deal.” And if it dies as a result of the FCC blocking the deal, the company may also save a reported $1.7 billion breakup fee, he writes.

While Burstein says he does not think the FCC ultimately will block the deal, that remains a possible outcome. And given some concerns on the Street with the price AT&T is paying for BellSouth, the stock’s performance today could be responding to the theory that the deal could be in trouble.

T-BLS 1-yr comparison chart:

T-BLS 1-yr comparison chart

Source: Will AT&T Let Its Bid To Acquire BellSouth Die?