AT&T ending ‘among the dumbest mergers in current history’

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AT&T ending 'one of the dumbest mergers in recent history'

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CNBC’s Jim Cramer on Monday knocked AT&T as a disgrace after the business revealed it will spin-off WarnerMedia to combine business and develop a home entertainment giant with Discovery.

He likewise took objective at those hailing the relocation as a transformational one, railing versus AT&T for handling heavy financial obligation 3 years ago to acquire Time Warner for $85 billion.

“It’s not a transformational deal… it’s the final act of one of the dumbest mergers in recent history,” the “Mad Money” host stated. “The truth is, AT&T made a boneheaded decision and now they’re paying for it, but in corporate America, no one really pays for it, no one’s even allowed to say it, no one’s allowed to admit it.”

In an offer worth $43 billion, the WarnerMedia-Discovery tie-up will offer AT&T investors a considerable stake in the brand-new business. The deal, anticipated to close about a year from now, ends AT&T’s experiment to integrate material and circulation in a vertically incorporated business.

Cramer berated the telephone company for purchasing a media organization, slamming previous AT&T CEO Randall Stephenson, who got a $64 million retirement bundle in 2015.

“Today’s move is a major repudiation of that nonsense. All this talk of synergies and monetizing AT&T’s close relationship with its customers was totally chimerical,” Cramer stated. “To me, this was a tremendous destruction of value.”

AT&T shares fell 2.7% to $31.37 along with a 5% slide in Discovery to $33.85.

AT&T is a cautionary tale for why financiers need to beware in owning high dividend-yielding stocks, Cramer stated. The almost 6.7% yield on AT&T was an indication that something is incorrect with the business, otherwise the stock would be greater and the yield lower. And numerous AT&T investors own the stock for the dividend, which has actually been halved, he included.

“This is what happens when you run the most heavily indebted company in America. I can tolerate this blundering by Apple or Alphabet or Facebook,” he stated. “They’d never do something as stupid, but at least they’re sitting on mountains of cash, so they can afford to make mistakes.”

Disclosure: Cramer’s charitable trust owns shares of Facebook, Apple and Alphabet.

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