T-Mobile Us Inc (NASDAQ:TMUS) is in the final stages of closing a merger deal with Sprint Corp. After the closure of the deal, the value of Sprint will slightly go above its market price of $6.50 per share. This is according to people close to the deal.
As part of the deal, T-Mobile’s President and Chief Executive Office John Legere will be in charge of the merged company. The new company will have dual headquarters in Kansas City, Washington and Bellevue. According to the source, a number of Sprint executives will retain their jobs under the merged company after the deal is sealed.
The deal will be valued at $26 billion and will be fully paid for in stock and according to the source sought anonymity, it could be announced any time this week. The source added that no deal has been signed so far and it could still fail to sail through.
SoftBank, which owns a majority stake in Sprint, will Deutsche Telekom that owns a majority stake in T-Mobile to consolidate the merged company’s earnings. The deal will not attract any breakup fee.
If sealed, the deal will bring an end to several years of boardroom negotiations between the two companies. The recent round of negotiations stalled after Masayoshi Son, the CEO of SoftBank pulled out because he didn’t want to lose control of the merged company. After the merger, Deutsche Telekom will own over 40% of the new company. SoftBank will have less than 30% stake in the new company.
A number of things were changed on the deal a few months ago that made Son change his mind and allow the deal to proceed. These include increased awareness of how it will cost Sprint to deploy 5G, increased synergies from lower corporate taxes plus a rapidly changing competitive wireless market which now include cable providers.
Just last week, Charter Communications Inc (NASDAQ:CHTR) and Comcast Corporation (NASDAQ:CMCSA), the largest cable companies in the U.S announced that entered an extended partnership agreement that will see both companies jointly develop products and services. However, the most motivation factor may have been the settling of T-Mobile and Sprint share prices following several months of speculations about the deal which inflated the stock of both companies.