T-Mobile (TMUS) and Sprint Close to an Agreement

Shares of T-Mobile International AG (TMUS) were up +0.72 or +2.10 percent to $35.00 per share in Thursdayâ s pre-market, after it was revealed late yesterday that Sprint Corp. (S) was close to reaching an agreement for the acquisition of T-Mobile in a deal that could value the company for as much as $40 billion. T-Mobile stock closed at $34.28 per share, up +0.08 or +0.23 percent in Wednesdayâ s regular trading session.

Bonn, Germany based T-Mobile International AG is a holding company for subsidiaries of Deutsche Telekom AG (DTEGY) outside of Germany. The company is responsible for GSM, LTE and UMTS based cellular networks in 11 countries in Europe, the United States, Puerto Rico, and the U.S. Virgin Islands. T-Mobile has a combined total of about 230 million subscribers and is the tenth largest mobile phone service provider in the world and the fourth largest in the United States. Overland, Kansas based Sprint Corp. was founded as the Brown Telephone Company in 1899 and has since become the third largest wireless network operator in the United States, servicing more than 54 million customers. In addition to its mobile phone network, the company also offers a wide array of broadband services including wireless voice and messaging services and Internet access. According to sources allegedly close to the matter, the deal could be worth $32 billion to $40 billion and will likely be announced in July. Sprint would pay roughly $40 per T-Mobile share in cash and Sprint stock. A breakup fee of $1 billion to $3 billion that Sprint will pay T-Mobile is also being negotiated and will be included in the deal in the event that the acquisition is blocked by regulators. The combination of the Sprint and T-Mobile will give AT&T (T) and Verizon (VZ) competition not previously possible for the two as standalone companies. Nevertheless, AT&T was blocked from taking over T-Mobile in 2011 and is currently in the process of acquiring DirecTV (DTV). Another mega-deal currently in the works is Comcastâ s (CMCSA) takeover of Time Warner Cable (TWC). Both T-Mobile and Sprint are owned by larger companies, after Japanese carrier Softbank purchased Sprint for $21.6 billion in 2012. Softbank currently owns 80 percent of Sprint and after the acquisition will leave Deutsche Telecom with a roughly 15 percent stake in the merged unit. Deutsche Telecom, which owns 67 percent of T-Mobile, has been asking at least $40 per share, which would give T-Mobile an equity value of around $31 billion. Softbank, for its part has been bidding in the high $30s for the company and according to sources an agreement has been tentatively reached. While nothing has yet been confirmed with any response from either company, the two companies still have a long process before a formal announcement can be made. Both T-Mobile and Sprint stocks reacted positively to the deal in afterhours trading yesterday and again this morning. With time before a formal announcement, both stocks should see considerable activity and offer ample trading opportunities. Other News About T-Mobile Comcast latest company to be linked to T-Mobile purchase Comcast and Dish Network were also interested in buying T-Mobile. T-Mobile shows Samsung love, adds Galaxy Note 10.1 Galaxy tablet will be available from T-Mobile on June 4th. Other Stocks in the News Apple, Microsoft Targets of Chinese Media in U.S. Spat Tensions increase over cyberspying and hacking allegations. Sara Leeâ s Breakup Is Starting to Pay Off Breakup into Hillshire Brands and D.E. Master Blenders begins to pay off.

Published on Jun 5, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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