US Inc. have agreed on new terms for their merger, as the wireless carriers race to close the deal after overcoming a federal court challenge.
The parties will improve the exchange ratio in the all-stock deal for T-Mobile’s parent,
, the companies said in a written statement confirming an earlier Wall Street Journal report.
U.S. District Judge
last week allowed the deal to proceed by rejecting arguments from a group of state attorneys general seeking to block the merger as anticompetitive.
T-Mobile said after the court ruling that it was working to close the transaction as soon as April 1.
Originally, 9.75 Sprint shares were to be exchanged for each T-Mobile share. Under the revised deal,
SoftBank Group Corp.,
which owns more than 80% of Sprint’s common stock, will exchange the equivalent of 11 of its shares for each T-Mobile share. Sprint’s other shareholders will continue to get the original exchange ratio.
Deutsche Telekom is to own about 43% of the combined company now, up from just below 42% when the deal was first announced nearly two years ago, the companies said. SoftBank’s percentage will drop to approximately 24% from 27%. The remaining 33% is to be held by the public, up from 31%.
To effect the changes, SoftBank has agreed to surrender 48.8 million T-Mobile shares to the new company, to be called T-Mobile. Those shares could be reissued to SoftBank if T-Mobile’s stock price reaches certain milestones beginning two years after the deal closes.
The original merger agreement allowed either party to walk away after Nov. 1, 2019, without paying a penalty. Both companies stuck with the deal over the following months, however, as they defended it in federal court. They argued the merger would create a more efficient network that would offset any harm to competition.
Given the downward slide of Sprint’s shares amid continued customer defections since the tie-up was announced—as T-Mobile’s growing customer base pushed up its stock—Deutsche Telekom was expected to push for an altered exchange ratio and a larger share of the new T-Mobile.
When the deal was announced, Sprint shares were trading around $6.50. Before the court ruling Feb. 11, Sprint’s share price had sunk to $4.80. It has since jumped above $9. Sprint shares closed nearly unchanged Thursday at $9.48, and rose 5% in after-hours trading. T-Mobile shares closed down about 1% at $99.50, and fell a further 1% in after-hours trading.
The deal was valued above $26 billion when the carriers originally struck it in April 2018.
Both the U.S. Justice Department and Federal Communications Commission approved the combination last year after they secured concessions from T-Mobile and Sprint, the third- and fourth-largest U.S. wireless carriers by subscribers, respectively. Those concessions include an agreement that Sprint would sell airwaves and about nine million customer accounts to
Dish Network Corp.
to set up a fourth nationwide cellphone carrier.
The new agreement allows either company to walk away from the merger without penalty if the transaction hasn’t closed by July 1.
T-Mobile executives have said the transition will be smooth, touting their experience handling a past combination with wireless provider MetroPCS.
The new T-Mobile will have more than 90 million U.S. customers and aims to nab more subscribers from
The three companies will dominate the U.S. wireless market, though they must also compete with more newcomers, including cable companies that resell service from large carriers.
T-Mobile and Sprint have spent more than seven years pursuing a combination in some form. The two companies abandoned previous attempts in 2013 and 2017 before their boards struck an agreement in early 2018 that would allow T-Mobile to take over its smaller rival, creating a company closer in size to Verizon and AT&T.
—Sarah Krouse contributed to this article.
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