T-Mobile US And Sprint To Merge In All-stock Transaction

(RTTNews) - T-Mobile US (TMUS) and Sprint Corp. (S) said that they reached 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 about $59 billion for Sprint and approximately $146 billion for the combined company.

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 Boards of Directors of T-Mobile and Sprint have approved the transaction. Deutsche Telekom and SoftBank Group are expected to hold approximately 42% and 27% of diluted economic ownership of the combined company, respectively, with the remaining about 31% held by the public.

T-Mobile said that the Board will consist of 14 directors, 9 nominated by Deutsche Telekom and 4 nominated by SoftBank Group, including Masayoshi Son, Chairman and Chief Executive Officer of SoftBank Group, and Marcelo Claure, Cheif Executive Officer of Sprint. John Legere, Cheif Executive Officer of the New T-Mobile, will also serve as a director. Upon consummation of the transaction, the combined company is expected to trade under the (TMUS) symbol on the NASDAQ.

T-Mobile US stated that the new company will have some of the most iconic brands in wireless - T-Mobile, Sprint, MetroPCS, Boost Mobile, Virgin Mobile - and will determine brand strategy after the transaction closes.

The transaction is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close no later than the first half of 2019.

Following closing, the new company will be headquartered in Bellevue, Wash., with a second headquarters in Overland Park, Kan. John Legere, current President and Chief Executive Officer of T-Mobile US and the creator of T-Mobile's successful Un-carrier strategy, will serve as Chief Executive Officer, and Mike Sievert, current Chief Operating Officer of T-Mobile, will serve as President and Chief Operating Officer of the combined company.

The remaining members of the new management team will be selected from both companies during the closing period. Tim Höttges, current T-Mobile US Chairman of the Board, will serve as Chairman of the Board for the new company. Masayoshi Son, current SoftBank Group Chairman and Chief Executive Officer, and Marcelo Claure, current Chief Executive Officer of Sprint, will serve on the board of the new company.

The new company expects to create substantial value for T-Mobile and Sprint shareholders through an expected $6+ billion in run rate cost synergies, representing a net present value of $43+ billion, net of expected costs to achieve such cost synergies.

From the first day Sprint and T-Mobile combine and every year thereafter, the new company will employ more people in the U.S. than both companies would separately. More than 200,000 people will work on behalf of the combined company in the U.S. at the start.

Meanwhile, Deutsche Telekom said that the transaction will not affect its outlook on the group for the current financial year 2018. Deutsche Telekom's statement on dividend policy for the financial year 2018 also remains unchanged.

Net leverage (defined as net debt to adjusted EBITDA) for Deutsche Telekom is expected to exceed the target corridor of 2.0-2.5x following the transaction. However, strong free cash flow generation of T-Mobile US over the coming years is expected to result in strong deleveraging bringing the ratio back to the target corridor in 2021.

In a separate press release, American Tower Corp. (AMT) released information about its business in light of the proposed merger between Sprint and T-Mobile US For the quarter ended December 31, 2017, Sprint and T-Mobile US each accounted for approximately 8% of American Tower's consolidated property revenues.

For the quarter ended December 31, 2017, on sites where both companies had separate leases for antenna space, the revenue generated from Sprint represented approximately 4% of American Tower's consolidated property revenues and the revenue generated from T-Mobile US represented approximately 3% of American Tower's consolidated property revenues. The average remaining non-cancellable current lease term on these sites with Sprint and T-Mobile US is approximately three to four years.