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March 23, 2011 Paper accepted for presentation
Wireless Telecommunications Symposium 2011
New York city
A Prediction Model of Merger & Acquisitions in the US Telecommunications Industry - A Case Study of a Recent M&A in the Wireless Communications Sector
Ye Ouyang & M.Hosein Fallah
The “1997 Merger Guidelines” articulates the analytical framework that the Department of Justice (DoJ ) and the Federal Trade Commission (FTC) use to review merger and acquisition cases. To better apply the guidelines to the M&A cases in the telecommunication industry, the authorities and merging companies in the Telecommunications industry have a need to translate the provisions of the general guidelines to the specific situation of the telecom sector. Based on the telecommunication M&A cases between 1996 and 2009, this paper develops a model to assess the predictability of prospective M&A outcomes from the DoJ/FTC review process. The model could be a good leading indicator for the potential merging companies and the decision makers in M&A reviews. While the model integrates the M&A criteria based on the M&A circumstances in the telecommunication industry, it does not eliminate the need for exercise of judgment from the evaluation of mergers under the antitrust laws. A recent merger case between Cisco and Starent Networks is evaluated as a case study.