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Iliad Offers $15B for a Stake in T-Mobile

Dan Jones
7/31/2014

French operator Iliad has made a brazen $15 billion bid to scupper the long-rumored Sprint-T-Mobile US merger this Thursday and to try and get a 56.6% stake in the "uncarrier" for itself.

Iliad (Euronext: ILD) is initially offering $15 billion in cash for the majority stake, which would value T-Mobile US Inc. 's stock at $33. Further to that, the French operator says it values the remaining 43.4% of T-Mobile US stock at $40.5 per share.

This would give shareholders an overall value of $36.2 per share. T-Mobile's shares opened at $31.02 on Thursday.

"The US mobile market is large and attractive," Iliad said in a statement. "T-Mobile US has successfully established a disruptive position, which in many ways, is similar to the one Iliad has built in France."

At first sight, the bid looks akin to a minnow trying to swallow a guppy. T-Mobile's current market cap is $24.84 billion, while Iliad's stands at $16 billion.


Read up on T-Mobile's Q2 earnings here.


Nonetheless, Iliad says that it will finance its cash bid through a combination of debt and equity and has the support of international banks to raise acquisition debt money.

Whatever happens, an Iliad bid puts more heat on a oft-rumored $32 billion hook-up between Sprint Corp. (NYSE: S) and T-Mobile US. Any potential merger between the number three and four US wireless operators would always face intense security by government authorities as well. (See Sprint, T-Mobile Settle on $32B Price.)

"This transaction should not raise any antitrust issue in light of the competition rules given that Iliad is not present in the United States," Iliad writes of its bold bid.

T-Mobile's shares are now trading up around 5.82% at $32.74.

— Dan Jones, Mobile Editor, Light Reading

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briandnewby
briandnewby
7/31/2014 | 9:55:53 PM
Re: Start of a bidding war?
We often talk of a Sprint/T-Mobile relationship, but couldn't Softbank all along place an offer on T-Mobile?  Why couldn't Softbank do this on its own, much like it did with Sprint, and thus begin investing in multiple carriers without operating them (for now).

I'm sure I have an investment in all four major carriers (through 401k funds :-) ) and I didn't need special approval.

Still, you get my point--it seems like Softbank is hamstrung because it has an equity interest in Sprint, or, maybe, the whole Sprint/T-Mobile discussion is chest puffing for a bigger play and there isn't a real intention at all for Sprint to merge with T-Mobile.
pcharles09
pcharles09
7/31/2014 | 7:53:48 PM
Re: Start of a bidding war?
@James_B_Crawshaw,

That's a good position to be in. It's also a position to aspire to be in.
James_B_Crawshaw
James_B_Crawshaw
7/31/2014 | 5:01:32 PM
Re: Start of a bidding war?
Iliad's minority shareholders get nothing. Iliad's CEO (who owns 55%) gets to play Masayoshi Son for a while ...
ethertype
ethertype
7/31/2014 | 4:54:01 PM
Why?
What on earth would Iliad gain from succeeding?  4th rank in a market they don't understand at all.  The opportunity to race Sprint to the bottom on price. Zero synergy. This makes no sense.

Given that, I have to agree with James B Crawshaw that it begs credulity as a serious offer, but when he says "this is just a stunt to get Sprint to make their offer earlier," I wonder why they would even care to do that?  Is there any sense in which Sprint and Iliad are competitors or Iliad would benefit by driving up Sprint's price?

C'mon, LR, when you see something this ridiculous, YOU should be asking these questions rather than accepting it at face value.
DanJones
DanJones
7/31/2014 | 4:49:44 PM
Re: Start of a bidding war?
But what would Iliad gain from forcing Sprint's hand, I don't get that at all.
James_B_Crawshaw
James_B_Crawshaw
7/31/2014 | 4:35:55 PM
Re: Start of a bidding war?
If Iliad seriously wanted to buy a 57% stake in T-Mobile US they would go to Deutsche Telekom (who owns 67%) not the board of T-Mobile US. This is just a stunt to get Sprint to make their offer earlier than anticipated. Quite what Iliad's minority shareholders get out of this I don't know. They can buy shares in US telcos on their own account if they wish. They don't need Iliad to do so. Seem's like M. Niel's ego has got the better of his rationality ...
DanJones
DanJones
7/31/2014 | 2:57:30 PM
Start of a bidding war?
Is this the start of a bidding war? Legere mentioned "multiple" inorganic options for growth on the Q2 call. I assume he didn't just mean Cuban heels?
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