It has been an incredible waiting game with Sprint and T-Mobile’s merger, considering that it was two years ago that the two companies announced it. The cellular network providers however are now closer than ever to completing the merger and the two have recently renegotiated the terms of the deal.
The Justice Department has given the merger the green light despite many states against it. NY Attorney General Attorney Letitia James has argued, “From the start, this merger has been about massive corporate profits over all else, and despite the companies’ false claims, this deal will endanger wireless subscribers where it hurts most: their wallets.”
It was in February that U.S. District Judge Victor Marrero sided with the companies’ $26 billion merger and stated, “T-Mobile has redefined itself over the past decade as a maverick that has spurred the two largest players in its industry to make numerous pro-consumer changes.”
A lawsuit from a coalition of 15 attorneys general was the last thing that was standing in the way of the deal for the companies. Judge Victor Marrero wrote, “The resulting stalemate leaves the Court lacking sufficiently impartial and objective ground on which to rely in basing a sound forecast of the likely competitive effects of a merger.”
The two companies have agreed to amend their merger deal agreement to give Deutsche Telekom, the majority owner of T-Mobile, a higher ownership stake in the new combined company.According to an announcement, SoftBank and Deutsche Telekom will hold 24% and 43% of shares in the newly combined company, respectively. Common shareholders won’t see a change in the exchange ratio, which is 9.75 Sprint shares for 1 T-Mobile share.
SoftBank however, who owns the more than 80% of Sprint, will see an exchange ratio of 11 Sprint shares for each T-Mobile share, the companies both said. SoftBank agreed to surrender about 48.8 million T-Mobile shares it will gain in the merger after the transaction is complete. SoftBank and Deutsche Telekom will hold 24% and 43% of shares in the newly combined company, respectively.
The companies have noted that the amendments do not impact any of the prior estimates around expected synergies, long-term profitability, or cash flow. T-Mobile and Sprint initially expected the deal to create over $6 billion in run-rate cost synergies.
Sources:
https://www.fool.com/investing/2020/02/01/better-buy-sprint-vs-t-mobile.aspx
https://www.fool.com/investing/2020/02/22/t-mobile-and-sprint-tweak-their-deal.aspx
https://techcrunch.com/2020/02/11/sprint-t-mobile-merger-gets-federal-judge-approval/
