SoftBank Group Corp.’s talks to merge U.S. unit Sprint Corp. with T-Mobile US Inc. have hit a serious snag, according to people familiar with the matter, throwing the deal into jeopardy after months of talks.
In the past three days, the companies have been unable to get past differences over valuation, according to a person close to T-Mobile parent Deutsche Telekom AG, who asked not to be identified discussing private information. Meanwhile, several members of SoftBank’s board have raised concerns about giving up control of the U.S. wireless business, another person said.
Nikkei reported Monday that SoftBank will propose ending the talks as early as Tuesday, citing the concerns about control of the combined entity. The merger discussions have gone through several fits and starts over a long period, and it’s unclear whether the companies will ultimately return to the table, the people said.
Sprint shares sank as much as 13 percent in New York trading, while T-Mobile fell as much as 5.9 percent. The companies had been ironing out final terms of the merger in the hopes of announcing a deal in mid- to late November, people familiar with the matter told Bloomberg earlier this month.
While merger talks have been underway for months, SoftBank board members raised their concerns in the last few days because it’s now a make-or-break moment, with the sides very close to a deal, the person familiar with the matter said.
Deutsche Telekom and T-Mobile declined to comment. Sprint and SoftBank representatives didn’t immediately reply to requests for comment.
Investors have cheered on a combination of T-Mobile, the third-largest U.S. wireless carrier, with No. 4 Sprint as a way to cut costs and forge a bigger competitor to take on AT&T Inc. and Verizon Communications Inc. Without the merger, the industry could return to the intense price wars that have put pressure on profits for all four major carriers — to the delight of consumers, who have gotten heavy phone discounts and unlimited data service.
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A deal between Overland Park, Kansas-based Sprint and Bellevue, Washington-based T-Mobile would be certain to attract heavy scrutiny from regulators, since it would reduce the four largest carriers in the country to three. Under former President Barack Obama’s administration, officials fended off a previous attempt by SoftBank to merge Sprint with T-Mobile. The companies had been hoping their chances would improve under a more business-friendly Trump administration.
Deutsche Telekom, based in Bonn, Germany, has maintained throughout the talks this year with SoftBank that it should maintain control of the combined company. Tokyo-based SoftBank had been willing to accept a stock-for-stock merger that valued Sprint at our near its market price, with no premium, people familiar with the matter said last month.
— With assistance by Stefan Nicola, and Scott Moritz
Sprint’s Merger Talks With T-Mobile Are in Peril – Bloomberg