Sprint closer to obtaining financing for T-Mobile acquisition

Sprint closer to obtaining financing for T-Mobile acquisition
A new report on Thursday says that Sprint has eight banks ready to provide it with financing, in order to make a purchase of rival carrier T-Mobile. The amount of the financing comes out to $40 billion, which includes a $20 billion bridge loan that would be made by SoftBank to Sprint. Another $20 billion would involve the refinancing of existing debt owed by T-Mobile.

Five major lenders, JP Morgan Chase & Co, Goldman Sachs Group, Deutsche Bank AG, Bank of America Merrill Lynch and Citigroup Inc, have agreed to finance the transaction. A trio of Japanese banks, Mizuho Financial Group Inc, Bank of Tokyo-Mitsubishi UFJ Ltd and Sumitomo Mitsui Financial Group, are also believed to be involved. SoftBank and Sprint are moving ahead, planning the transaction despite the odds that regulators will try to block the deal. According to those familiar with the transaction, the deal will be announced in August.

T-Mobile is owned by Deusche Telekom, and the German Telecommunications firm has apparently agreed to the broad outline of a deal that would pay T-Mobile stockholders $40 a share. That would value T-Mobile at $32 billion. If regulators block the transaction, Deutsche Telekom would receive a $2 billion break-up free from SoftBank. On the other hand, if Deutsche Telekom pulls out of the transaction, SoftBank will receive a $1 billion break-up fee from Deutsche Telekom.

There is speculation that if a deal is completed, T-Mobile CEO John Legere will be tapped to run the combined company.

source: Reuters

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30 Comments

1. QWIKSTRIKE

Posts: 1459; Member since: Mar 09, 2010

Financing won't matter if the deal is blocked. Greedy banks just want some of the action.

6. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Banks get a fee for making the line available regardless of whether it is actually used, so yes, win or lose, they get a piece of the action. Kind of how a break-up fee works. I guess Son-boy is going to be writing T-Mo a check for $2 B. Probably around first part of 2015, would be my estimate.

13. lsutigers

Posts: 832; Member since: Mar 08, 2009

You think you have it all figured out, don't you, Son-boy? Let's wait and see what actually happens instead of speculating. Recent info is that the FCC and DOJ may be willing consider the deal with all the other telecom merger proposals on the table. Nobody knows. Only time will tell.

17. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

A bit defensive, there lsutigers? I can't help you if you bought into Son-boy's fairy tale about how a merger was the only way to compete against AT&T and VZW. Unfortunately, no one else that matters (least of all DoJ; FCC staff is quite unimpressed with the pitch) is buying the fairy tale, so you are basically on your own. Maybe cut your losses and sell?

21. jimmy954

Posts: 7; Member since: Dec 24, 2013

Hey TMO fanboy that seems to know it all....The key to this whole Sprint deal is what happens with comcast/TWC, if that goes through the DOJ will have to let the Sprint deal go through or they will just sue and win....simple case. so for everyone thinking its a dead deal, they need to be watching comcast/TWC. No one seems to be really concerned with the FCC anymore, 5 member panel, 2 is already for it and a 3 has pretty much stated she has changed her mind. As I said the key is Comcast/TWC

25. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Hey Sprint fanboy who is trying to recoup their investment in Sprint - what makes you so sure that action in the cable space is going impact a merger attempt in the cellular space? Wishful thinking? In the future, try harder to pick deals that have a reasonable chance of closing. Just because there are other M&A transactions on the table, doesn't mean they will close. T-Mo may ultimately get sold to someone. It just won't be sold to Son-boy and Sprint.

23. fanesxx

Posts: 74; Member since: May 19, 2011

am i the only one who thinks this is a bad idea

2. matty1323

Posts: 43; Member since: Nov 22, 2011

Now that is not fair at all! "Deutsche Telekom would receive a $2 break-up free from SoftBank. On the other hand, if Deutsche Telekom pulls out of the transaction, SoftBank will receive a $1 billion break-up fee from Deutsche Telekom." Deutsche Telekom would get $2....2 Bucks while Softbank would get $1Billion? haha. Someone needs to edit that because we can't assume the $1 is 1B or 1M or what even though it's suspect.

3. mturby unregistered

Oh my god! please do something...against it.

4. 0xFFFF

Posts: 3806; Member since: Apr 16, 2014

Sprint buying T-Mobile may turn out even worse than K-Mart buying Sears.

26. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Sprint sure screwed up the Nextel acquisition. What was it - a cool Billion $ down the toilet?

5. joe1blue

Posts: 169; Member since: Jul 25, 2013

14. DonkeySauce

Posts: 194; Member since: Dec 03, 2011

What will cause more job loss: The companies merging and laying off some duplicate positions, or one or both of them going bankrupt and then being bought by another company anyway, but at a bargain price and having a massive layoff?

15. tuminatr

Posts: 1141; Member since: Feb 23, 2009

probibly bankruptcy

7. fahrenheits

Posts: 3; Member since: Jun 19, 2014

Well... at least the logo looks great lol

8. TheFirm

Posts: 33; Member since: Jun 05, 2014

Lmfao, are your hyperlinks really ads? Really? Lmfaooo

9. jimmy954

Posts: 7; Member since: Dec 24, 2013

cant wait for the deal to go through so all these TMO fanboys can get off of it. Its funny how nobody is complaining about Comcast and Time Warner

19. volvoV70guy

Posts: 13; Member since: Jun 06, 2014

Do you seriously think no one is complaning about Comcast and Time Warner Cable? That deal will almost certainly not happen, anyway.

20. jimmy954

Posts: 7; Member since: Dec 24, 2013

I haven't heard many people if any complaining about Time Warner deal, people don't realize that a bigger deal than Sprint and TMO lol. The key to this whole Sprint deal is what happens with comcast/TWO, if that goes through the DOJ will have to let the Sprint deal go through or they will just sue and win....simple case. so for everyone thinking its a dead deal, they need to be watching comcast/TWO

22. jimmy954

Posts: 7; Member since: Dec 24, 2013

typo above TWC**

27. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Maybe you are hearing/sight impaired, which is why you haven't 'heard' people complain about Comcast/TW? Just because you haven't 'heard' something, doesn't mean an acquisition will happen. You need to look at what is going to happen to market competition as a consequence of the proposed merger to see what its chances are of happening. The present crew at the DoJ really takes their job seriously.

10. fzacek

Posts: 2486; Member since: Jan 26, 2014

$2 break-up fee if the deal is blocked? I think that's supposed to be $2 billion...

11. o0Exia0o

Posts: 903; Member since: Feb 01, 2013

" If regulators block the transaction, Deutsche Telekom would receive a $2 break-up free from SoftBank." If Sprint pulls out all they have to pay is a 2 dollar break up fee. For that much I would be all in too. LAMFO

12. Planterz

Posts: 2120; Member since: Apr 30, 2012

Obviously a typo. I'm pretty sure they mean $2 billion. And f%#K Sprint. Why the hell this company exists is beyond my understanging, and why they're behind T-Mobile is baffling. Granted, I know diddly about international finance, but it seems to me that Sprint is circling the drain, and T-Mobile is swimming to the top. Current net-worths seem to be the factor, although whomever decides that, IDFK. Sprint sucks. This is a fact. Everybody who's done their research knows that Sprint sucks, and everybody I know that uses Sprint thinks it sucks, but uses it beacause they either have their head up their anus and won't change, are stuck on a contract, or use it because Sprint has some pretty cheap plans for people employed by companies that made deals with them for cheaper rates. On paper, it'll look like Sprint wants to buy T-Mobile, But in reality, it'll be that Sprint knows they're in the latter stages of a turd being flushed down a toilet, and they need a company, like T-Mobile, to say #$%& YOU to the duolopy of Verizon/A&TT Part of me wants this buyout/merger/whatever to succeed, so that an affordable alternative to AT&T/Verizon still exists, and with the power of 2 newtorks to support it. The other part hopes this fails, T-Mo gets a chunck of change to boost their network (and probably ends up surpassing, and possibly buying Spinrt), and rapes Verizon and AT&T with their "Uncarrier" strategy.

16. corporateJP

Posts: 2458; Member since: Nov 28, 2009

"Sprint closer to obtaining financing to pay T-Mobile break-up fee" Fixed...

28. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Or, Son-boy wants to stick Sprint with the cost of T-Mo merger break-up fee. Son-boy could write the check himself off of his gain from the Alibaba IPO. But he is too greedy. Better to stick the poor sods who bought into his fairy tale in the Sprint acquisition with the break-up fee - like jimmy954.

18. kevin91202

Posts: 642; Member since: Jun 08, 2014

Is PA an American website? It sure acts like it. I've read a lot of anti-Japanese or pro-European/American sentiment on PA. This article is not different. "Five major lenders, JP Morgan Chase & Co, Goldman Sachs Group, Deutsche Bank AG, Bank of America Merrill Lynch and Citigroup Inc, have agreed to finance the transaction. A trio of Japanese banks, Mizuho Financial Group Inc, Bank of Tokyo-Mitsubishi UFJ Ltd and Sumitomo Mitsui Financial Group..." The article names three "Japanese" banks, yet doesn't point out the nationality of the American and European banks. Why?

24. fjftokyo

Posts: 65; Member since: Jun 06, 2013

the deal wont go through just like the attempt with AT&T. T-mobile will gain more juicy spectum from the break up and more money which they will actually use to beef up it's infrastructure again just like it did with AT&T which is great to anyone including myself who switched from another carrier to T-mobile. In mycase Sprint and trust me I couldn't leave them fast enough. For I shall never in a million years return to that sorry excuse of a cell phone company.

29. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

"For I shall never in a million years return to that sorry excuse of a cell phone company." You have a lot of company. Sprint is hemorrhaging customers, and mostly to T-Mo. Which is another reason why Son-boy wants to do the deal - he needs to get those indentured servants back in the Sprint fold.

30. navylostboy

Posts: 2; Member since: Jul 25, 2012

i just love how the bashers of this deal seem to think that if it does not go through, that t-mobile will just keep on trucking. #1 t-mobiles parent company does not want to stay in the US market. they WANT to sell and have a seat on a board, not run one themselves. #2 without a merger the 3 and 4 comanies will fail, they cant generate enough money to grow properly and draw the income to be succesfull, the big 2 will continue to dominate. So what is the plan? fight this deal and t-mobile dies, or gets sold to someone smaller, like dish. So what do you want?

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