T-Mobile & Sprint Merger with $26.5 Billion to take on AT&T
T-Mobile US Inc. and Sprint Corp. agreed to combine in a $26.5 billion merger, creating a wireless giant to compete against industry leaders AT&T Inc. and Verizon Communications Inc.
Germany-based company that controls T-Mobile, and SoftBank Group Corp., the Tokyo-based owner of Sprint, agreed to a combination that values each Sprint share at 0.10256 of a T-Mobile share, the companies said in a statement Sunday. That ratio values Sprint at $6.62 a share based on T-Mobile’s Friday closing price of $64.52.
The deal would help the companies slash costs and could make them a stronger competitor to the larger AT&T and Verizon. But consumers might see higher prices because the combined company would not have to offer as many promotions to lure customers.
The proposed all-stock deal values Sprint at about $59 billion and the combined company at $146 billion.
Sprint dropped its bid for T-Mobile more than three years ago after running into concerns about wireless competition in the Obama administration. The two were poised to combine in October, but that deal was called off, too.
Sprint and its owner, the Japanese conglomerate SoftBank, have long been looking for a deal as the company has struggled to compete on its own.
Sprint has a lot of debt and has posted a string of annual losses. The company has cut costs and made itself more attractive to customers, BTIG Research analyst Walter Piecyk says, but it hasn’t invested enough in its network and doesn’t have enough airwave rights for quality service in rural areas.
Both companies appeared to be finalizing the deal on Friday, when they set valuation terms and were preparing to announce the merger today. The deal values Sprint at an enterprise value of around $59 billion, with the combined company having an enterprise value of $146 billion. AT&T has a market cap of around $214 billion, while Verizon has a market cap of around $213 billion, as of Sunday.
Article Complied from Sources.