T-Mobile and Sprint ‘close to closing a deal’

By:
Natalie Bannerman
Published on:

Talks surrounding the much talked about T-Mobile merger with Sprint are rumoured to be complete by the end of the month

T-Mobile US and Sprint are said to be close to completing an M&A deal, reports Bloomberg.

The unnamed sources claim that an announcement confirming the merger will likely happen at the end of the month in line with both companies’ quarterly earnings reports.

Both sides are said to be conducting final due diligence on the exchange ratio that will decide Sprint’s valuation for the all-stock deal.

Sprint’s current market value as of 6 October is around $29 billion, showing a drop of roughly 2%, while shares sit at $7.35. Sources claim that SoftBank, Sprint’s majority shareholder, would accept a valuation around its current market price. Conversely, T-Mobile saw an increase of 1.4% to $62.39, with a market valuation of $52 billion. 

Details surrounding the non-cash items are also being ironed out, including the location of the combined company’s headquarters and appointments to the executive management team. 

Talks over a possible merger between the two has been long running, with discussions beginning back in 2015. Talks resumed earlier this year, with SoftBank CEO Masayoshi Son eager to reach a deal. Only last month, reports confirmed that talks were active again.

A breakup fee isn’t likely to be included in the final agreement, the unnamed sources said, reducing the risk for both companies if US regulators reject the merger. In addition, both companies would be in the best position to lobby regulators for approval of the merger without any conflicts of interest. 

In 2011, AT&T was forced to pay a $4 billion breakup fee to T-Mobile when its takeover attempt of the smaller wireless network failed. As a result of the fee, which included cash, competitive roaming rates and wireless spectrum, T-Mobile’s position in the market was strengthened and it overtook Sprint to become the number three carrier in the US.

Though there were no official comments from Sprint, T-Mobile, SoftBank or Deutsche Telekom, the sources claim that if the last remaining obstacles can’t be resolved by the end of the month, an agreement could be pushed to a later date.