SoftBank agrees to merger
T-Mobile US makes stock-for-stock offer for Sprint at market price
NEW YORK: SoftBank Group Corp, the majority owner of Sprint Corp, is willing to accept a stockfor-stock merger with T-Mobile US that values Sprint at or near its current market price, according to sources.
While the two sides haven’t agreed on an exact value, SoftBank doesn’t expect to receive much of a premium to Sprint’s current share price and may accept a deal that values the fourth-ranked US wireless carrier at about its US$34bil (RM142bil) market capitalisation, said the sources.
Deutsche Telekom AG, the majority owner of third-largest US wireless provider T-Mobile, previously told SoftBank it felt Sprint shares should be valued at a significant discount to their market value, the sources said. In recent months, Deutsche Telekom has told SoftBank it’s willing to come up on value for Sprint, they said.
At current market values, a stock-for-stock merger would give SoftBank almost 33% of the combined company and Deutsche Telekom about 39%. Deutsche Telekom plans to consolidate the merged company’s earnings by controlling the board of directors, said a source. Other governance arrangements haven’t been finalised, the source said.
Deutsche Telekom is pressing for a deal that would value Sprint below its current market capitalisation, which could leave SoftBank owning 30% or less of the combined company, a source said.
Another source said the terms haven’t been resolved and that SoftBank is unlikely to accept a deal for less than Sprint’s market value. How the two sides will determine market value remains undecided.
It also hasn’t been decided whether Sprint shares or T-Mobile will issue shares to complete the deal.
Representatives for SoftBank, Sprint and T-Mobile declined to comment.