As per a Bloomberg report, SoftBank Group Corp., the majority holder of Sprint Corp (NYSE:S), reported that it intends to approve a stock-for-stock deal with T-Mobile US Inc (NASDAQ:TMUS) that values company at or near its prevailing market price. As of now, no decision has been taken on a final value, however, Softbank is not expecting much of a premium to the prevailing share price of Sprint. It may accept a proposal that values Sprint at around its market cap of $34 billion.
Deutsche Telekom AG previously reported SoftBank it felt Sprint stock should be valued at a notable discount to their market value. Deutsche is now willing to offer value for Sprint. Considering prevailing market values, a stock-for-stock deal would offer SoftBank around 33% of the combined firm and Deutsche Telekom nearly 39%. Deutsche Telekom intends to consolidate the merged firm’s earnings by controlling the board. Other governance arrangements have yet to be finalized.
Deutsche Telekom is looking for a transaction that would value Sprint below its prevailing market cap, which could leave SoftBank getting 30% or less of the combined firm. As of now, no terms for the deal have been finalized.
In addition, SoftBank is unlikely to go for a transaction that values Sprint below its prevailing market cap. It still remains undecided how the two sides will reach on common terms. Also, the two firms have to decide whether Sprint stock or T-Mobile will issue stock to close the deal. Representatives for Sprint, T-Mobile and SoftBank declined to comment.
In the last trading session, the stock price of Sprint jumped more than 6% to close the day at $8.52. The gains came at a share volume of 26.20 million compared to average share volume of 10.36 million. After the recent gains, the market cap of firm was recorded at around $34 billion.