Sprint, T-Mobile Said to Close In on $26.5 Billion Combination

(Bloomberg) -- T-Mobile US Inc. and Sprint Corp. are poised to combine in a $26.5 billion merger, creating a wireless giant to compete against industry leaders AT&T Inc. and Verizon Communications Inc., according to people familiar with the deal.

Deutsche Telekom AG, the Bonn, Germany-based company that controls T-Mobile, and SoftBank Group Corp., the Tokyo-based owner of Sprint, agreed to a combination that values each Sprint share at 0.10256 of a T-Mobile share. That ratio values Sprint at $6.62 a share based on T-Mobile’s Friday closing price of $64.52, said the people, who asked not to be identified discussing the terms.

The German company will have nine directors, while Sprint will have four including SoftBank Chief Executive Officer Masayoshi Son, said the people, who asked not to be identified discussing the terms. T-Mobile chief John Legere will by the CEO of the combined company. The companies expect synergies of about $40 billion, with $6.5 billion on a run-rate basis, the people said, and there is no break-up fee attached to the agreement.

Representatives of Sprint and T-Mobile didn’t immediate respond to requests for comment.

Deutsche Telekom gets will end up with a 42 ownership stake while SoftBank will have 27 percent, the people said. Sprint closed Friday at $6.50 a share.

The combination of Sprint and T-Mobile would create a company with about $74 billion in annual revenue and 70 million wireless subscribers. Verizon is the largest U.S. carrier with $88 billion in 2017 wireless revenue and 111 million subscribers, and AT&T would remain No. 2 with $71 billion in wireless revenue and 78 million regular subscribers.

The latest negotiations, coming about five months after an earlier merger attempt collapsed, follow years of will-they-won’t-they deliberations. Previous negotiations broke down after the two sides couldn’t agree on how to structure control of the combined entity, people familiar with the matter said at the time.

To contact the reporters on this story: Nabila Ahmed in New York at nahmed54@bloomberg.net, Scott Moritz in New York at smoritz6@bloomberg.net.

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Kevin Miller

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