Deutsche Telekom (DTEGY) has given approval to a proposed purchase of T-Mobile US (TMUS) by Japan's Softbank (SFTBF), the parent company of Sprint (S), according to Kyodo News, citing sources
If and when Softbank / Sprint makes a bid on TMUS, I'm guessing there will be a healthy spread between the buyout price and stock trading price.
My guess is that the spread will be around 10%.
T had offered TMUS $39/share, since then TMUS has grown in customers and assets: How much do you think the take over price will be? Logically it should be at least 50-MO.....
From the article orgashie referenced, "Earlier this month, a source told Reuters that Sprint was meeting with banks to work out funding for its bid for smaller rival T-Mobile US, carrying an estimated $50 billion price tag."
two years ago, T was punished to pay $3B to TMUS because of the loss of lawsuit of monopoly. It can be understood why T trumpets to take over TMUS again while Dish is in thinking of how to get enough customer base to fulfill the equipment's purchasing requirement which Dish bought earlier this year. After all, TMUS was founded by T and several T top management level people still owns lots of TMUS shares.
Two years ago, when the $3B filled in TMUS, TMUS's cap was around $16B and price was around $21 (that is, volume around 0.76B, and it means that T's money increase every TMUS stock $4), with such a big income, TMUS's earning is only 25 cents a quarter -- not even half of what T paid her. By this mean, actually TMUS is losing money in her business of attracting customers thru low monthly fees and equipment (like iPhone) give-away. Together with high defeated equipment rate (we got two Sumsung Note II and both failed to receive satellite signals in 15 months), terrible customer services and disloyal customers (we already signed up with Verizon instead, really hate going around six or seven departments/call# of TMUS during every time we had problems on the phones and signals), I don't think Dish should even think about offering TMUS at any price beyond $25/share: $27.8B market cap, 317.8 million USA population, let say 280M people use cellphones and TMUS takes 1/4 of the people, that make TMUS's stock is currently valued $397 for every TMUS cellphone user. Therefore, if DISH is giving out an offer at $34/share, it is equivalent to DISH provides free cellphone service to each customer a year. I believe it is better for DISH to find her own customers by offering free one-year service with a two-year contract instead -- at least she can earn the next year service fees safely rather than keep paying unknown annual-end bonuses to the terrible TMUS sales and management teams.
Sentiment: Strong Sell
"quite a jump" ... no wonder i couldn't receive signal at Union Station Los Angeles.
Well, from the beginning, TMUS has been planning to sell itself to T or other wireless company (this was why T helped to setup TMUS -- initially T wanted to become the largest wireless company after merging with TMUS). If you know how so many Chinese restaurants and fast food shops pumped up their annual sales amounts in order to sell themselves to other self-employed dreamers at a much higher transaction prices in Southern CA in recent years, you'll understand why TMUS is willing to lose money in order to pumping her customer database -- don't know which wireless company will be broke in the same way as those dreamers who bought the Chinese restaurants and fast food shops.
It doesn't sound like Sprint is bidding for the T-mobile shares that we can buy on the open market...they are bidding for Deutsche Telecom's majority ownership stake. It's a different thing. This isn't like when AT&T tried to acquire Tmobile. It's very possible that the price of Tmobile shares will sharply decrease after people finally realize this.
I really don't think most people currently holding TMUS are expecting a buyout payment. More likely they're expecting the stock price to appreciate as a result of literally doubling network resources.
Lets assume $50 billion, TMUS has an enterprise value of $45 Billion. That's an 11% arb assuming a cash deal. It's questionable if the FTC would even approve. I wouldn't touch T-Mobile. Good time to cash out imo.
Just keep in mind, even if the merger is approved you'll be waiting until around this time next year to find out.
Why the thumbs down? Someone thinks the merger will be approved by the US gov't before the end of the year? If so, I'd like some of what you're smoking.
YEP, and DT will make a bundle on this deal.
My opinion .. although tmus is poised for #3, they're still operating on a negative balance sheet, so is Sprint