Shares of Sprint and T-Mobile rise after reports of merger talks
05/29/2014 12:06 PM
06/03/2014 10:17 AM
Conflicting reports surfaced Thursday about possible merger talks that could bring Sprint Corp. and T-Mobile US Inc. together.
A news report in Japan said Sprint’s parent company, Tokyo-based SoftBank Corp., had reached a limited agreement with T-Mobile’s Germany-based parent, Deutsche Telekom.
Kyodo News cited unnamed sources under the headline “Deutsche Telekom OKs SoftBank buyout of T-Mobile: sources.” The text was not available.
Other media outlined different descriptions, also citing unnamed sources. Reuters said “no decision was imminent” and “details such as price and financing remain to be worked out.”
None of the companies commented on the reports.
SoftBank and Deutsche have made no secret of their desire to seek a transaction, but regulators in Washington have similarly been candid about their reservations.
Some outsiders took the disparate reports Thursday as a sign that no significant progress had been made.
“It doesn’t seem like anybody’s injecting anything new here,” said consultant Berge Ayvazian with the website Heavy Reading.
Ayvazian said the reports may be designed to keep the story of a potential merger alive and “in front of regulators.”
Wall Street took notice and lifted shares of both U.S. companies. Sprint’s stock gained 24 cents, or 2.6 percent, and closed at $9.44. T-Mobile was up 46 cents, or 1.3 percent, at $34.86.
An account of the Kyodo report from Bloomberg News said it claimed SoftBank CEO and Sprint chairman Masayoshi Son had proposed an acquisition “and got a positive response” from executives at T-Mobile and Deutsche Telekom.
It added that the companies would “accelerate talks toward a final agreement and work out how to proceed with the acquisition,” citing the Kyodo report.
Similarly, the website Seeking Alpha reported that the Kyodo news agency said Deutsche Telekom had “signed off on” a bid from SoftBank and Overland Park-based Sprint to acquire the German firm’s 67 percent stake in T-Mobile.
Reuters, citing its own sources, said it learned instead that Deutsche Telekom would be willing to keep part of its holdings, perhaps 15 percent of T-Mobile. That would reduce the amount of funding any buyer would need to acquire a majority stake.
An analyst at JPMorgan said Deutsche Telekom is “now more open” to a deal provided that T-Mobile remain as the surviving brand, according to another Bloomberg report.
The analyst said Deutsche Telekom would be interested in remaining an owner of T-Mobile as part of a sale, Bloomberg said.
SoftBank’s Son has been vocal about the benefits of combining the two smaller U.S. wireless carriers. Together they would be larger and make a more formidable competitor for industry leaders AT&T and Verizon.
U.S. regulators have made it clear, however, that they prefer the current four national players, buoyed by T-Mobile’s recent success in gaining new subscribers through its aggressive marketing campaign.
Sprint and SoftBank may face challengers in any bid for T-Mobile. A UBS analyst said last week that cable company Comcast could decide to bid for T-Mobile, a report from Investors Business Daily said, given that AT&T has a deal to buy satellite broadcaster DirecTV.
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