- Sprint stock rocketed more than 60% in pre-market trading on Tuesday.
- The rally came after The Wall Street Journal reported a federal judge will approve Sprint’s mega-merger with T-Mobile.
- The two mobile carriers agreed to merge in April 2018, but authorities worried the deal would reduce competition and raise prices.
- Visit Business Insider’s homepage for more stories.
- Watch Sprint trade live.
Sprint stock rocketed more than 60% in premarket trading on Tuesday after the Wall Street Journal reported a federal judge is likely to approve Sprint’s proposed merger with T-Mobile.
America’s third- and fourth-largest mobile carriers agreed to join forces in April 2018, but authorities held up the $US26 billion all-stock deal as they worried it would reduce competition and increase prices for consumers.
Sprint and T-Mobile have been notified of the imminent approval, and the decision will be announced later today, The Journal reported, citing people familiar with the matter. The New York Times also reported that the companies are about to get the judge’s go-ahead.
The Journal said it wasn’t clear whether the pair would be asked to make further concessions to assuage the federal government’s competition concerns.
The two carriers already agreed to help build a new rival carrier and offer the same or better-value plans to customers in order to win approval from federal antitrust officials and industry regulators. The latest decision comes after a coalition of state attorneys general argued the merger could increase device prices and service charges, The Journal said. They may still appeal the decision.
Sprint’s shares soared to $US7.90 in pre-market trading, a premium to their valuation of $US6.62 under the merger terms (the value of 0.10256 T-Mobile shares based on their closing price of $US64.52 on April 27, 2018). The rally lifted Sprint’s market capitalisation by roughly $US13 billion to $US33 billion.
T-Mobile shares climbed by about 9% to $US92 in pre-market trading, boosting the carrier’s market capitalisation by about $US6 billion to nearly $US79 billion.
The enlarged T-Mobile is set to have more than 90 million US customers, putting it on a more even footing with industry titans AT&T and Verizon, The Journal said. Deutsche Telekom will own about 42% of the new company, SoftBank will own 27%, and the rest of the shares will be publicly owned.
When Sprint and T-Mobile announced the deal nearly two years ago, they expected to realise more than $US6 billion in annual cost savings. They also predicted they would make more than $US53 billion in annual revenue and $US22 billion in adjusted profits.
Business Insider Emails & Alerts
Site highlights each day to your inbox.