T-Mobile Said to Plan to Turn Down Iliad's $15 Billion Offer

Tuesday, 05 Aug 2014 02:06 PM


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T-Mobile US Inc. plans to turn down Iliad SA’s $15 billion deal proposal, a person with knowledge of the matter said, putting pressure on the French telecommunications company to raise its offer.

The person asked not to be named because the plans are private. Iliad, led by billionaire founder Xavier Niel, said July 31 it offered $15 billion in cash for 56.6 percent of T- Mobile. Sprint Corp., controlled by Japan’s SoftBank Corp., has been preparing an offer worth about $40 a share, people familiar with the matter have said, a combination that would probably face tough U.S. regulatory scrutiny.

Deutsche Telekom AG, which holds 67 percent of T-Mobile, considered Iliad’s initial bid as inferior to Sprint’s, a person familiar with the reaction said last week. The Bonn-based carrier’s management would consider missing out on a higher price if that meant avoiding the uncertainty of a prolonged antitrust review, other people said.

Still, a higher offer would heighten concern among Iliad investors that the company, valued at 11 billion euros ($15 billion), will stretch its finances too thin by taking control of T-Mobile. The Bellevue, Washington-based operator has almost twice Iliad’s market value and may have to spend billions of dollars on spectrum and network construction in coming years. Iliad shares fell the most in almost eight years the day after it disclosed its bid.

Deutsche Telekom wants to avoid reliving its 2011 attempt to sell T-Mobile to AT&T Inc. for $39 billion. The accord was initially hailed as a dealmaking success for Deutsche Telekom, until it was blocked by the U.S. Federal Communications Commission and the Department of Justice.

Anne Marshall, a spokeswoman for T-Mobile, declined to comment.

© Copyright 2014 Bloomberg News. All rights reserved.

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