[Infowarrior] - Sprint, T-Mobile close to merger

[Richard Forno]

(Too bad — I fear that Sprint is going to screw this up good, and the many customers - including me - that flocked to TMobile in recent months may leave just as quickly.  —rick)

Sprint, T-Mobile Said Near Accord on Price, Termination Fee

By Alex Sherman - Jun 4, 2014

http://www.bloomberg.com/news/print/2014-06-04/sprint-t-mobile-said-near-accord-on-price-termination-fee.html

Sprint Corp. (S) is nearing an agreement on the price, capital structure and termination fee of an acquisition for T-Mobile US Inc. that could value the wireless carrier at almost $40 a share, people with knowledge of the matter said.

Sprint will offer about 50 percent stock and 50 percent cash for T-Mobile, leaving parent Deutsche Telekom AG with about a 15 percent stake in the combined company, according to the people, who asked not to be identified because the process is private. The agreement could be announced as soon as July, the people said.

Deutsche Telekom, which owns about 67 percent of T-Mobile, was seeking at least $40 a share, two of the people said. SoftBank Corp., which owns 80 percent of Sprint, is willing to pay in the upper $30s, and the two sides have bridged the gap, the people said. They companies haven’t set an announcement date, and there’s still a lot of work to be done before a deal is completed, including deciding management of the new company, the people said.

Bill White, a spokesman for Sprint, and Anne Marshall, a spokeswoman for T-Mobile, didn’t immediately respond to messages seeking comment.

Enterprise Value

At about $40 a share, T-Mobile’s equity value would be about $31 billion. The company has about $14.5 billion of debt and $5.5 billion of cash, giving T-Mobile a theoretical enterprise value of about $40 billion.

T-Mobile rose as much as 6.5 percent to $36.50 in late trading, while Sprint gained as much as 4.8 percent.

Additional work that remains to be done includes developing a model that forecasts Sprint and T-Mobile’s future independently and together, two of the people said. The projections are key to convincing regulators that allowing a merger is in consumers’ best interests. AT&T Inc.’s $48.5 billion deal for DirecTV has given SoftBank founder Masayoshi Son more confidence that he can make a strong case, two of the people said.

The sides are nearing an agreement on a reverse termination fee, two of the people said. Son wants to pay about $1 billion, while Deutsche Telekom has pushed for closer to $3 billion, people familiar with the matter said earlier this month.

Bloomberg News previously reported a deal would probably be announced in June or July. It’s possible a deal announcement could slip into August, one of the people said. If no deal is reached by then, the sides are likely to stop negotiations for several years and wait for a new presidential administration, the person said.

To contact the reporter on this story: Alex Sherman in New York at asherman6 at bloomberg.net

To contact the editors responsible for this story: Mohammed Hadi at mhadi1 at bloomberg.net Elizabeth Wollman, Sarah Rabil


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Just because i'm near the punchbowl doesn't mean I'm also drinking from it.