Sprint Corporation (S) to Pursue Takeover Bid for T-Mobile US (TMUS)

Sprint Corporation (NYSE:S), the third largest wireless carriers in the United States plans to pursue a takeover bid for its smaller rival T-Mobile US Inc (NYSE:TMUS) after meeting with banks to arrange a debt financing for the proposal, according to Bloomberg based on information from sources familiar with the situation.

The report indicated that the Sprint’s CFO Joe Euteneuer, and Treasurer Greg Block had a meeting with six banks to make sure that financing structures are available once the company decides to submit its offer to acquire T-Mobile US Inc (NYSE:TMUS).

According to the sources, Eteneuer and Block met with the executives of Goldman Sachs Group Inc. (NYSE:GS) Citigroup Inc. (NYSE:C) JPMorgan Chase & Co. (NYSE:JPM), Mizuho Financial Group Inc. (TYO:8411),  Bank of America Corp. (NYSE:BAC)  and Deutsche Bank AG (NYSE:DB).

Sprint Corporation (NYSE:S) had been considering to acquire its smaller competitor since December, last year. There had been speculations that a transaction between the two wireless carriers could be worth $19 billion.

Son to submit formal offer by June or July

According to one of the people knowledgeable about the plan, Masayoshi Son, founder and CEO of Softbank Corporation (TYO:9984), the majority owner of Sprint Corporation (NYSE:S) will submit a formal offer to acquire T-Mobile US Inc (NYSE:TMUS) by June or July.

Son and his advisers are preparing an argument that will convince regulators that a merger between Sprint and T-Mobile will be beneficial for the U.S. wireless industry over the long-term. According to the sources, Son and his team believed that AT&T Inc (NYSE:T) was not prepared to convince regulators when it proposed to acquire T-Mobile in 2011.

Regulators stated strict stand on merger

Last February, the Department of Justice and The Federal Communications Commission (FCC) emphasized its strict stand on merger. The regulators stated their intention to thoroughly scrutinize a merger between Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS).

Softbank negotiating with Deutsche Telekom

One of the sources said Son’s company is negotiating with T-Mobile’s parent company, Deutsche Telekom AG (ETR:DTE) regarding the issue on who will lead the company after the deal. The person said T-Mobile’s CEo John Legere is the number candidate. Another person said Deutsche Telekom wants to obtain as much cash as possible from the transaction.

Stock price

The stock price of Sprint Corporation (NYSE:S) closed $8.50 per share, up by 2.78% today. The stock increased further by 7% to $9.10 per share during the extended hours trading driven by the report regarding the company’s intention to move forward with its plan to takeover T-Mobile US Inc (NYSE:TMUS). The stock price of T-Mobile also climbed more than 9% to $32 per share after hours today.