Sprint To Offer Deal For T-Mobile As Early As July
Details on the Tentative Deal
A deal of 50 percent stock and 50 percent cash for T-Mobile is expected to be announced as soon as July. Bloomberg's sources placed the value of the offering at almost $40 per share, or equity value of $31 billion.
This tentative agreement between the third- and fourth-largest wireless carriers in the United States would allow Sprint to compete against AT&T and Verizon.
The report noted that Deutsche Telecom, a 67 percent shareholder of T-Mobile, was looking for $40.00 per share. With SoftBank looking to pay in the upper $30.00's, “the two sides have bridged the gap.”
Is the Price Too Low?
Despite the 17 percent premium on T-Mobile shares, JP Morgan commented that the $40.00 per price seems low.
Analyst Hannes Wittig remarked, “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.”
Shares of Sprint closed at $9.40 on Wednesday. In after-hours trading, the stock jumped to 9.84, up 4.68 percent. In pre-market trading, share leveled around $9.90 before plunging to $9.45. The stock is currently down over 4.5 percent at $8.97.
T-Mobile closed at $34.28 on Wednesday. Shares spiked to $36.00 in after-hours trading. The stock fell to $33.73 in pre-market trading, and is currently at $33.24, down 2.8 percent.
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