“Sprint Corp has agreed to pay about $40 per share to buy T-Mobile US Inc, a person familiar with the matter said, marking further progress in the attempt to merge the third and fourth-biggest U.S. mobile network operators,” Paritosh Bansal and Harro Ten Wolde report for Reuters. “The $40 price represents a 17 percent premium to T-Mobile US’s closing share price on Wednesday, giving it a valuation of more than $32 billion and the shares have more than doubled in price since the group bought smaller rival MetroPCS a year ago.”
“Hannes Wittig, an analyst at JP Morgan, said the $40 price, if confirmed, seemed low. ‘T-Mobile US should be worth more than that given that the synergies should exceed $20 billion, Deutsche Telekom would share some of the execution risk and Sprint would be getting control … Somewhere in the high 40s would be more appropriate,'” he said,” Bansal and Ten Wolde report. “Japan’s Softbank, which owns Sprint, and Deutsche Telekom, which owns 67 percent of T-Mobile, still have to negotiate on the details, including financing and the termination fee to be paid should the merger get blocked by regulators, the source familiar with the matter said.”
“Analysts see the regulatory challenge as the biggest hurdle facing the companies since both the U.S. Federal Communications Commission (FCC) and Department of Justice (DOJ) have expressed a desire to have at least two more network operators competing against the market leaders AT&T and Verizon,” Bansal and Ten Wolde report. “Three years ago regulators rejected AT&T’s agreed $39 billion bid for T-Mobile US, which resulted in AT&T paying Deutsche Telekom as T-Mobile’s full owner a reverse break-up fee of $6 billion in cash and U.S. mobile assets. Under the proposed sale to Sprint Deutsche Telekom is expected to keep a 15 to 20 percent stake in the combined company, the source said.”
Much more in the full article here.