T-Mobile US and Sprint have adjusted the terms of their long-sought merger, which recently cleared a major legal challenge. T-Mobile shareholders will own a slightly larger percentage of the new company than under the previous agreement. Such an adjustment had been widely expected by investors, with many expecting an even greater consideration to T-Mobile investors than the new deal announced on Thursday evening.
T-Mobile stock (ticker: TMUS) fell close to 2% in after-hours trading, while Sprint stock (S) jumped almost 5%.
Under the revised terms, shareholders will receive one T-Mobile share for each 11 Sprint shares they hold. That compares with the original 9.75 exchange ratio agreed in April 2018, which was more favorable to Sprint shareholders.
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T-Mobile’s controlling shareholder, Deutsche Telekom (DTE.Germany), will own about 43% of the combined company, while Sprint’s majority owner SoftBank Group (9984.Japan) will hold 24%. Public shareholders will own the remaining third of the new T-Mobile.
In addition, SoftBank will surrender almost 49 million T-Mobile shares at the time of the merger, which it can get back if the stock reaches certain price levels. That agreement essentially gives public shareholders a better price than SoftBank is getting in the deal.
“Today’s announcement is another significant step forward toward finally closing this transaction!” said T-Mobile CEO John Legere in a statement Thursday. “Throughout this journey, T-Mobile and Sprint have been singularly focused on one thing: building a supercharged Un-carrier that will offer U.S. consumers a broad and deep nationwide 5G network, more choice and greater competition. We are now on the threshold of achieving our goal.”
The companies also said Thursday that the combination could close as soon as April 1.
T-Mobile was able to eke out a better price in the deal because its business fundamentals have performed much better than Sprint’s during the merger’s lengthy regulatory review and legal challenge. The companies’ stock prices have reflected the divergence.
Barron’s recently called T-Mobile shares a winner whether its merger was approved or not.
Write to Nicholas Jasinski at nicholas.jasinski@barrons.com
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February 20, 2020 at 03:25PM
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T-Mobile and Sprint Amend Merger Terms. The Deal Could Close in April. - Barron's
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