Latest Round of T-Mobile/Sprint Talks Got Going in March

T-Mobile and Sprint told the SEC discussions of their deal, announced at the end of April, got going once again March 26 and 27 during a meeting between representatives of T-Mobile and parent Deutsche Telekom and Sprint and parent SoftBank. The companies detailed the prolonged discussions in a Monday S-4 filing. Three other unidentified companies also had spoken to Sprint about a possible deal. T-Mobile could potentially pay Sprint up to $600 million if the agreement is terminated, the companies said. Even after the two called off a deal last November, some discussions continued. At the March meeting, “representatives of T-Mobile and Deutsche Telekom indicated that they would be prepared to proceed with negotiations at an exchange ratio equivalent to 10 shares of Sprint common stock for each share of T-Mobile common stock,” they recounted. “Representatives of Sprint and SoftBank indicated that they would not continue discussions with T-Mobile and Deutsche Telekom on that basis.” After more discussions, both sides settled on an exchange ratio equivalent to 9.75 shares of Sprint stock for each share of T-Mobile stock. DT made clear at the March meeting it would agree to a deal only if it became the controlling stockholder. T-Mobile's board signed off on the deal April 27. April 29, the day the deal was announced, “the Sprint board of directors unanimously determined that the business combination agreement and the transactions contemplated by the agreement were fair to, and in the best interests of, Sprint and its stockholders,” the filing said. That day, DT's board of management and, later, its supervisory board agreed. Risks include “the substantial risk that regulatory authorities might seek to impose conditions on or otherwise prevent or delay the merger, or impose restrictions or requirements on the operation of the businesses of the combined company.” Another risk for T-Mobile is “the substantial indebtedness of Sprint and the anticipated substantial indebtedness of the combined company following the closing of the transaction, as well as the type and terms of such indebtedness, and the risk that the combined company will be constrained by its need to, and may not be able to, meet its debt service obligations,” the filing said. Combining won’t be easy, the filing acknowledges. There's “the possibility that anticipated synergies and other benefits of the transaction might not be achieved in the time frame contemplated or at all, and the other numerous risks and uncertainties that could adversely affect the combined company’s operating performance and financial results.”