T-Mobile US Inc. (NASDAQ: TMUS) and Sprint Corporation (NYSE: S)announced on Sunday that the two have entered into a definitive agreement to merge to accelerate the race for 5G technology, pushing the combined company value to $146 billion.
“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience – and do it all so much faster than either company could on its own,” said John Legere, President and Chief Executive Officer of T-Mobile.
“As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf.”
The combined company says it will employ more people than both companies separately. T-Mobile also says it will open more than thousands of job opportunities in the U.S. to help accelerate 5G technology.
The two carriers have met multiple times in the past four years regarding merger talks, but never progressed any further.
T-Mobile’s majority stakeholder Deutsche Telekom AG and Sprint’s majority owner Softbank Group Corp. considered the acquisition, but after the most recent talk in November, Softbank CEO Masayoshi Son pulled out.
The merger also faced problems during the Obama administration, as it held its stance saying the top carriers should remain independent to offer consumers more choices and lower prices.
Even during the Trump administration T-Mobile and Sprint face scrutiny because of its opposition against mega mergers. The two carriers put the talks on hold after the government blocked AT&T Inc.’s (NYSE:T) takeover attempt for Time Warner, but is now pending federal court review.
Unlike, AT&T’’s acquisition attempt for Time Warner, T-Mobile and Sprint’s merger will allow them to compete against Verizon Communications Inc. (NYSE:VZ) and AT&T. The combined company would have approximately 127 million customers.
Under the agreement, the two will merge in an all-stock transaction at a ratio of approximately 0.1 T-Mobile shares for each Sprint share or 9.75 Sprint shares for each T-Mobile share. Based off the closing of last week on Friday, the deal is worth $59 billion assuming debt or $26.5 billion without debt.
Following the closing of the transaction, the new company will be headquartered in both Bellevue, Washington and Overland Park, Kansas. Legere will serve as the CEO of the company. Masayoshi Son, Softbank Chairman and CEO, and Marcelo Claure, CEO of Sprint, will serve on the board of the new company.
T-Mobile and Sprint shares both shares both plummeted after the announcement. T-Mobile shares were trading 7 percent and Sprint shares were trading 15.2 percent lower midday on Monday.