Last Thursday was a big surprise as the slow moving union between T-Mobile US and Sprint Corp was jolted when France’s Iliad made a huge offer of the US operations of T mobile, therefore setting up a titanic clash between two of the world’s biggest telecommunications companies.
The French telecommunications giant said in a statement that it made a cash offer of $15 billion for a 56% controlling stake of the United States based T- Mobile. This development brought about new uncertainty into a Merger that already faced obstacles, even as analysts say that the French company’s bid may not succeed.
T-Mobile is the fourth biggest cellphone form in the United States and has been in protracted 6 months long negotiations for acquisition by Sprint which is currently ranked in third position and owned by the SoftBank Corp of Japan. The two companies have agreed on about $32 billion dollars compensation which is way higher than what Iliad is willing to offer. Iliad appears to be taking advantage of the failure by the two negotiating companies to announce a deal, saying its deal is least likely to encounter regulatory obstacles. Sprint is yet to disclose the official offer which it made for the T-mobile of the US.
When confirming a report regarding its bid by the Wall Street Journal, Iliad said” the united stated market is quite large and attractive”. T-mobile US has succeeded in disrupting the market which is just similar to how Iliad was built in the French Nation. Iliad has been known for waging wars in the mobile phone sector.
T- Mobile US did not comment on the offer, but it acknowledged its receipt. SoftBank believes that its offer is superior and presents the best way forward for both T-Mobile United Stated and Sprint, said a person who has insider information about the company.
However, many questions have been raised by the approach which Iliad took. Analysts are wondering how a group that has a total market value of $16 billion pull up a deal for a firm whose market value is more than $25 billion before the offer was forwarded. Iliad said it made an offer of $33 per share for the 56.6% stake in T-Mobile US. Iliad says that it intents to finance the offer through a combination of equity and debts.
The company added that the rest of 43.3% of T-Mobile US shares will be worth $40.50 a share based on-expanded synergies of about $10 billion. This will settle the overall value of T-Mobile share at $36.2. On the other hand, people who are familiar with the plans say that Sprint is willing to pay $40 for every share of T mobile US.
“ We are a little skeptical that the shareholders of T-mobile, including Deutsche Telecom will find this bid a little more attractive” wrote a Credit Suisse analyst.