Just as was rumored, T-Mobile and Sprint have now confirmed that they’ve updated their merger agreement.
The new agreement includes an exchange ratio of 11.00 Sprint shares for each T-Mobile share, up from the original agreement of 9.75 Sprint shares. SoftBank, Sprint’s owner, has agreed to surrender 48.8 million T-Mobile shares acquired in the merger to the New T-Mobile, making SoftBank’s effective ratio 11.31 shares per T-Mo share.
Sprint shareholders other than SoftBank will continue to get the original fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share, or the equivalent of 9.75 Sprint shares for each T-Mo share.
Following the closing of the merger, T-Mobile parent company Deutsche Telekom will hold approximately 43% of New T-Mobile’s shares while SoftBank will hold 24% and the remaining 33% will be held by public shareholders. The previous deal saw DT getting 42%, SoftBank getting 27%, and public shareholders getting 31%.
The updated agreement has an outside date of July 1, 2020. The outside date is when the parties have agreed that if a merger has not closed, either side can walk away from the deal.
T-Mobile and Sprint’s merger agreement previously lapsed on November 1st, 2019, and so that’s why the two companies have struck an updated agreement today. Since the merger was first announced, Sprint’s churn has risen and average revenue per user has fallen, and so Deutsche Telekom is said to have wanted to renegotiate the terms of the merger. Now it’s getting a slightly bigger piece of the New T-Mobile.
T-Mo reiterated today that the merger could close as soon as April 1, 2020. A judge recently rejected a lawsuit from a group of states seeking to block the deal, but the merger must still be approved by the California Public Utilities Commission and is undergoing a Tunney Act review for any potential antitrust concerns.