Sprint Corp (NYSE: S) has agreed to pay about $40 U.S. per share to buy T-Mobile US Inc, a person familiar with the matter said, marking further progress in the attempt to merge the third and fourth-biggest U.S. mobile network operators.
The $40 price represents a 17% premium to T-Mobile US's closing share price on Wednesday, giving it a valuation of more than $32 billion U.S. and the shares have more than doubled in price since the group bought smaller rival MetroPCS a year ago.
Japan's Softbank, which owns Sprint, and Deutsche Telekom, which owns 67% of T-Mobile, still have to negotiate on the details, including financing and the termination fee to be paid should the merger get blocked by regulators, the source familiar with the matter said.
Analysts see the regulatory challenge as the biggest hurdle facing the companies since both the U.S. Federal Communications Commission and Department of Justice have expressed a desire to have at least two more network operators competing against the market leaders AT&T (NYSE: T) and Verizon (NYSE: VZ)
Three years ago, regulators rejected AT&T's agreed $39-billion U.S. bid for T-Mobile US, which resulted in AT&T paying Deutsche Telekom as T-Mobile's full owner a reverse breakup fee of $6 billion U.S. in cash and U.S. mobile assets.
Under the proposed sale to Sprint, Deutsche Telekom is expected to keep a 15% to 20% stake in the combined company, the source said.
Sprint shares responded to the news by adding six cents, or 0.6%, to $9.64 U.S., in early morning trade on Thursday, within a 52-week range of $5.61 U.S. to $11.47 U.S.
T-Mobile's U.S. shares tumbled 55 cents, or 1.6%, to $33.73 U.S., within a 52-week range of $20.31 U.S. to $35.50 U.S.
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