Dresdner analysts don't see DT bidding for Sprint
May 6, 2008
10:50 AM -- Analysts at Dresdner Kleinwort believe there's only a "20-30% possibility" that Deutsche Telekom AG (NYSE: DT) will make a bid for troubled U.S. carrier Sprint Corp. (NYSE: S). (See DT & Sprint: A Bargain in the Balance?)
In a research note issued Tuesday, the Dresdner team writes that it's likely the German carrier is examining such a bid.
However, the estimated negative impact of such a bid on DT's share price, which is under intense scrutiny by major DT shareholders such as The Blackstone Group , will probably kill off any Sprint acquisition aspirations, though the analysts believe there's still a slight chance of a bid, given Sprint's depressed stock and the current weakness of the dollar. (See DT Welcomes Blackstone.)
The Dresdner crew also provides a list of the problems any DT bid for Sprint would encounter:
A possible bidding war for the asset
Foreign ownership issues for major telco assets in the U.S.
U.S. antitrust clearance
Difficult execution in current market conditions
Negative news flow during the integration
Management credibility given domestic operational challenges
Is that all? Not much of a challenge, then...
Deutsche Telekom's share price is down $0.29, about 1.6 percent, to $17.64 today on the New York Stock Exchange (NYSE) , while Sprint is down $0.09, just more than 1 percent, to $8.63, giving it a market value of nearly $24.6 billion.
— Ray Le Maistre, International News Editor, Light Reading
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