Tuesday , 19 February 2019
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France’s Iliad makes takeover bid for T-Mobile US

French operator Iliad, know under the brand Free, has made a takeover bid for T-Mobile US. The surprise offer marks Iliad’s first expansion outside its home market, where it first broke open the triple-play market and then drove down prices in the mobile market by becoming the fourth network operator. Iliad said T-Mobile’s ‘unCarrier’ strategy has many similarities to its own development in France.The French company is offering USD 15 billion for 56.6 percent of T-Mobile US, equal to USD 33.0 per share. It values the remainder of T-Mobile at USD 40.5 per share, based on an estimated UD 10 billion in synergies for T-Mobile shareholders. This results in a total price of USD 36.2 per share, a premium of 42 percent on T-Mobile’s share price in December 2013 when reports first emerged of Sprint’s interest in T-Mobile.

Iliad said it would finance the cash offer with a combination of debt and internal resources and has secured the support of international banks for the loans. Around EUR 2 billion would come from a capital increase at the French company, in which controlling shareholder Xavier Niel has pledged his participation. Iliad said it does not expect any regulatory problems with the acquisition, given it currently has no presence in the US.

Iliad’s offer comes as Deutsche Telekom was thought to be close to an agreement to sell its controlling stake in T-Mobile to Sprint, merging America’s third and fourth largest mobile operators. Softbank, the parent company of Sprint since last year, has been keen to consolidate the market in order to step up competition with the leading operators Verizon and AT&T.

According to media reports, Deutsche Telekom is concerned about possible regulatory opposition to the deal and had been seeking a high break-up fee in case the deal was vetoed by competition authorities. Its earlier attempt to sell T-Mobile to AT&T was blocked in 2011 due to competition concerns. The company used the break-up fee and spectrum received from AT&T to help turnaround the T-Mobile business and acquire the smaller operator MetroPCS last year.

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