AT&T to Acquire T-Mobile USA in $39 Billion Deal

AT&T, Inc. (T) said Sunday that it will pay $39 billion in cash-and-stock to acquire Deutsche Telekom’s T-Mobile USA. The deal, which would create a new industry giant by combining two of the four largest U.S. wireless carriers, includes a cash payment of $25 billion with the remainder to be covered with AT&T common stock.

In a statement, Randall Stephenson, AT&T’s Chairman and CEO, said: “This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future. It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people…During the past few years, America’s high-tech industry has delivered innovation at unprecedented speed, and this combination will accelerate its continued growth.”

The acquisition, which is subject to regulatory approvals, has been approved by the Boards of Directors of both companies and is expected to close in about a year, the wireless companies said in a joint statement.

As part of the deal, Bonn-based Deutsche Telekom will get an ownership interest in AT&T of approximately 8%, and a Deutsche Telekom representative will join AT&T’s board.

Dallas-based AT&T said it won’t assume any debt from either T-Mobile USA or Deutsche Telekom and that it  would finance the cash portion of the deal with new debt and cash on AT&T’s balance sheet. The U.S. telecom giant has an 18-month commitment for a one-year unsecured bridge term facility underwritten by JP Morgan (JPM) for $20 billion.

The transaction is expected to be accretive to AT&T’s earnings, excluding non-cash amortization and integration costs, in the third year after closing.

Shares of AT&T closed Friday up $0.20 at $27.94 on a 26.5 million volume. Ticker has 52-wk range of $23.78 – $30.10.

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About Ron Haruni 1067 Articles
Ron Haruni is the Co-Founder & Editor in Chief of Wall Street Pit.

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