Code Names and a Friday Toast Helped Seal Sprint, T-Mobile Deal

(Bloomberg) -- Last month, a $26.5 billion deal called “Project Lakes” rocked the telecom industry.

Never heard of it? Don’t feel bad. Project Lakes was the secret code name for T-Mobile US Inc.’s deal to take control of Sprint Corp.

Each company had an alias as well: Diamond’s Tahoe (Deutsche Telekom AG’s T-Mobile US) finally agreed to merge with Seneca-owned Salt (SoftBank Group Corp.’s Sprint) after years of on-again, off-again interest.

The names were changed from the previous round of talks -- which collapsed in November -- to help keep the negotiations under wraps, according to people familiar with the matter, who asked not to be identified because the details were private. It was a secret code, after all.

Last year’s discussions were known as “Project Nations,” the people said. T-Mobile US was Thailand, and Deutsche Telekom was Denmark. Sprint was Spain, and SoftBank was Sweden.

M&A bankers and their clients often use code names in secret talks to ensure they don’t unintentionally disclose inside information via a conversation overheard in a restaurant or elevator. They’re a colorful part of the cloak-and-dagger world of dealmaking, from “Project Bobtail” for AT&T Inc.’s $109 billion tie-up with Time Warner Inc. to “Tag Heuer” when Thales SA acquired rival Gemalto NV.

Representatives for Deutsche Telekom, Sprint and SoftBank declined to comment. T-Mobile US didn’t respond to requests for comment.

After the “Lakes” settled on the terms, they celebrated Friday -- two days ahead of the formal announcement -- at the offices of the law firm Wachtell Lipton Rosen & Katz in Manhattan, the people said. T-Mobile US Chief Executive Officer John Legere and Sprint’s Marcelo Claure (their real names) shook hands and toasted the deal, as evidenced in a photo posted to Deutsche Telekom’s Instagram account last week.

While SoftBank’s Masayoshi Son didn’t make the party, Deutsche Telekom chief Tim Hoettges joined in before heading home for the weekend.

Wall Street bankers have a reason to celebrate too. Banks made as much as $150 million in fees from advising on the transaction, according to estimates from Jeff Nassof, a director at Freeman Consulting Services. About $50 million to $70 million of that went to T-Mobile and Deutsche Telekom’s advisers at PJT Partners Inc., Goldman Sachs Group Inc., Deutsche Bank AG and Morgan Stanley.

The other $60 million to $80 million in fees was shared among the banks advising Sprint and SoftBank: Raine Group, Centerview Partners Holdings, JPMorgan Chase & Co., Mizuho Financial Group Inc. and SMBC Nikko Securities Inc.

©2018 Bloomberg L.P.

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