Market Overview

Sprint Trades At 40% Discount To T-Mobile Deal Terms

Sprint Trades At 40% Discount To T-Mobile Deal Terms

Investors appear to be under the impression T-Mobile Us Inc (NASDAQ: TMUS)'s proposed acquisition of Sprint Corp (NYSE: S) will fail, as Sprint's stock is trading at a notable discount, The Wall Street Journal reported Wednesday. 

Sprint Shares Trade At Discount To Deal Terms

Sprint's stock closed Tuesday at $4.86, while T-Mobile's stock closed at $79.80.

The math behind the original terms of the all-stock deal implies that Sprint's stock is trading at a 40% discount, according to WSJ.

The discount doubled in size over the past few months and now stands at the widest gap since the deal was proposed nearly two years ago.

Antitrust officials and regulators, especially in New York and California, argue the combination of the third- and fourth-largest cellphone carriers would negatively impact consumers.

The two telecom companies counter that joining together would create a more powerful company to better compete against the two largest carriers. 

Raymond James Analyst Says Market 'Pessimistic'

T-Mobile could gain billions of dollars in market value if the merger closes, but the market is "getting more pessimistic," Raymond James analyst Ric Prentiss told WSJ.

Investors are now working under the assumption that if the merger fails, "Sprint's going to go down pretty hard."

U.S. Judge Victor Marrero will listen to both sides' closing statements Wednesday morning and could render an opinion on the merger within the coming weeks, the publication reported.

Sprint shares were trading 0.21% higher at $4.87 at the time of publication, while T-Mobile shares were up 0.48% at $80.18. 

Related Links:

What The Sprint, T-Mobile Merger Trial Means For Investors

Analyst: AT&T Is The Top Telecom Pick For 2020

Public domain photo via Wikimedia

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Feb 2020CitigroupMaintainsNeutral
Feb 2020HSBCUpgradesReduceHold
Jan 2020CitigroupMaintainsNeutral

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