France’s Iliad reported to have put in offer for T-Mobile US

UPDATE: Iliad has reportedly confirmed that it has put in a $15 billion offer to gain a controlling stake in T-Mobile US. The offer is for $33 per share, or a 42% premium over the carrier’s stock price prior to the announcement. T-Mobile US’ stock was surging in mid-day trading, up more than 8%.
Sprint’s plans to acquire smaller rival T-Mobile US looks set to be usurped as published reports indicate that French telecom operator Iliad has made an offer to acquire the U.S. market’s No. 4 wireless operator.
According to The Wall Street Journal, Iliad submitted an offer to T-Mobile US’ board at some point over the past week. T-Mobile US has a market capitalization of nearly $25 billion, with Iliad valued at around $16 billion.
T-Mobile US earlier today announced robust second quarter financial results, including strong customer growth and a significant profit.
The acquisition attempt would look to purchase at least a portion of Deutsche Telekom’s current controlling interest in T-Mobile US, which was diluted somewhat last year following T-Mobile US’ acquisition of MetroPCS. An Iliad offer would appear to sidestep the expected regulatory hurdles seen as being in place connected to the combination of the domestic market’s No. 3 and No. 4 operators. U.S. regulators, including Federal Communications Commission Chairman Tom Wheeler, have hinted that they were happy with the current competitive environment consisting of four nationwide operators.
Sprint’s rumored bid for T-Mobile US, which would be bankrolled by Sprint parent company Softbank, has been an ongoing point of discussion, thought Sprint has made a point to not comment directly on the matter, only stating that consolidation among the nation’s four largest operators was likely. Reports in June suggested that a $32 billion offer was set to be made sometime in August.
Softbank and Sprint Chairman Masayoshi Son, earlier this year conducted a trip through the U.S., touting his vision on the need for industry consolidation in an attempt to form a stronger competitor against the domestic market’s heavyweights Verizon Wireless and AT&T Mobility.
The Wall Street Journal reported earlier this month that as part of a financial package being offered by Softbank to Deutsche Telekom, is a plan to raise $10 billion to be used in the upcoming 600 MHz spectrum auction. The report noted that the funds were part of a $45 billion financing package being put together by Softbank in order to gain control of T-Mobile US.
Following confirmation of the Iliad bid, Sprint’s stock plunged more than 7% in mid-day trading.
Analysts noted that Iliad’s offer could become a minority interest in the operations ahead of an eventual full acquisition by Softbank/Sprint later this year.
“We do not believe that DT would sell its entire control stake for [$33 per share], nor would minority investors with tag-along rights likely accept such a price,” explained Macquarie Capital analyst Kevin Smithen, in a research note. “In our view, DT could sell [10% to 20%] of [T-Mobile US] at {$33 per share] and de-consolidate it, and then both DT and Iliad could be patient for a protracted regulatory review on a Sprint deal. If a Sprint deal is approved, and synergies realized, Iliad could potentially make a 50% return on its investment over the next two years.”
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