According to sources, T-Mobile and Sprint are in the final stages of working out a deal for the companies to merge. These sources say the companies are trying to target their quarterly earnings announcement dates to have everything nailed down. Those announcements should happen in just over a couple weeks from now. Besides some final due diligence items under review, the biggest item to be addressed appears to be the exchange ratio to be used for Sprint’s valuation in what is likely going to be an all stock deal.
Besides being stock only, another big item that could have been a stumbling block is a breakup fee. Sources claim such a fee will not be included in the deal. This is expected to reduce the risk for both companies should something happen during the regulatory review process to kill the merger. Analysts also say this will free up both companies to engage in any appropriate lobbying to make the deal happen.
At least a couple non-cash items are still being worked out between the carriers and their respective backers. These include a final decision on the location of the new entity’s headquarters and who will be appointed to the executive management team. Although a breakup fee is apparently off the table now, there is still the possibility that SoftBank may still try to get a cash termination payment provision included depending on how negotiations on other issues goes.
Besides analysts watching the wireless carrier industry in the U.S., the deal may draw other attention as people watch to see how the Trump administration handles their anti-trust review of the proposed merger. Makan Delrahim was just appointed the head of the Antitrust Division with the Department of Justice and this will be the first major merger to be scrutinized by the Trump administration. If approved, the number of major wireless carriers in the U.S. will drop from four to three and the new T-Mobile/Sprint company will be roughly the same size as Verizon and AT&T.