Sprint and T-Mobile on Sunday announced they have reached a merger deal which will combine the number three and number four U.S. wireless carriers into one company in an all-stock deal worth billions. The deal will need to be approved by regulators before it can be made final.
T-Mobile US (NASDAQ: TMUS) and Sprint Corporation (NYSE: S) today announced they have entered into a definitive agreement to merge in an all-stock transaction at a fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share or the equivalent of 9.75 Sprint shares for each T-Mobile US share. Based on closing share prices on April 27, this represents a total implied enterprise value of approximately $59 billion for Sprint and approximately $146 billion for the combined company. The new company will have a strong closing balance sheet and a fully funded business plan with a strong foundation of secured investment grade debt at close.
The combined company will be named T-Mobile, and it will be a force for positive change in the U.S. wireless, video, and broadband industries. The combination of spectrum holdings, resulting network scale, and expected run rate cost synergies of $6+ billion, representing a net present value (NPV) of $43+ billion will supercharge T-Mobile’s Un-carrier strategy to disrupt the marketplace and lay the foundation for U.S. companies and innovators to lead in the 5G era.
Current T_Mobile CEO John Legere will server as the combined company’s Chief Executive Officer. The announcement says the combined carrier will be a “force for positive change” in the U.S. wireless, video, and broadband industries, supercharging T-Mobile’s Un-carrier strategy and allowing the new company to “lead in the 5G era.”
The terms of the deal state T-Mobile will exchange 9.75 Sprint shares for each T-Mobile share. Deutsche Telekom, T-Mobile’s parent company, will own 42% of the new company and SoftBank, Sprint’s parent company, will own 27%. Deutsche Telekom will own voting rights over 69% of the new firm. That will allow them to appoint nine of 14 directors. Sprint will appoint four.
T-Mobile CEO John Legere said the combined company will continue to bring “competitive disruption” to the wireless industry.
“We intend to bring this same competitive disruption as we look to build the world’s best 5G network that will make the U.S. a hotbed for innovation and will redefine the way consumers live and work across the U.S., including in rural America. As we do this, we will force our competitors to follow suit, as they always do, which will benefit the entire country. I am confident this combination will spur job creation and ensure opportunities for Sprint employees as part of a larger, stronger combined organization, and I am thrilled that Kansas City will be a second headquarters for the merged company.”
The deal, if improved by U.S. regulators, will create a combined company that will have nearly 100 million customers, second only to Verizon. The companies are targeting no later than the first half of 2019 for the merger to be completed.
The full press release can be read here, while a new “All for 5G” website, illustrating the combined carriers’ plan, is available here.