isn't quite a household name stateside, but that hasn't stopping
the French upstart carrier from making an unsolicited acquisition
offer to Un-carrier
. Iliad operates under the Free brand, which has been called the
"T-Mobile of France" as a disruptive challenger.
On the same day that T-Mobile reported earnings last week,
Iliad offered $15 billion to acquire a majority stake in
T-Mobile. The company is hoping to buy 57% of T-Mobile at $33 per
share, but also values the remaining 43% at $40.50 per share
assuming that the theoretically combined company could realize
$10 billion of synergies.
T-Mobile shareholders had a lot to be happy about. Not only
did the company add 1.5 million customers and put up a healthy
profit, but it also has a possible bidding war on the horizon
that could drive shares even higher.
Of course, it is speculated that
and Softbank have been trying to put together a bid for T-Mobile,
despite very public regulatory opposition on the idea. When two
of the four largest carriers want to consolidate, it's a hard
sell that competition and consumers will come out ahead in the
It's worth noting that Iliad does have a regulatory advantage.
Since Iliad currently does not operate in the U.S. at all, its
proposal may not raise an antitrust issue regarding competition.
On the other hand, a Softbank acquisition has already raised
regulatory eyebrows since the No. 3 and No. 4 domestic carriers
would be merging.
Operationally, Sprint and T-Mobile would go together better.
Since they do operate in the same market, there would be greater
synergies with employees, as well as all-important spectrum.
The bigger picture
There has been a bit of cross-pollination within the global
telecommunications industry in recent years. Japan's Softbank
in Sprint in 2012.
is interested in expanding into Europe, and was reportedly even
considering a massive acquisition of
bucked the trend and bought out Vodafone's 45% stake in Verizon
T-Mobile itself only went public last year after the company
merged with MetroPCS, and German parent Deutsch Telekom decided
to sell part of its stake. The German company retains a majority
stake in the Un-carrier (67% as of March), so it still calls the
Deutsch Telekom doesn't think Iliad's $33 per share offer is
competitive compared to the Sprint deal, which is reportedly
closer to $40 per share. Still, the regulatory differences in the
two deals can't be understated, and the Sprint deal is fraught
with risks. If Sprint does move forward with a $40 per share
offer, regulators could still potentially block the deal. If that
happened, $33 per share looks just fine.
This broader trend is only set to continue if either of the
purported deals goes through; either Japan's Softbank (via
Sprint) could grab a piece of T-Mobile, or France's Iliad
Regardless of how these storylines play out, T-Mobile is enjoying
every minute of it. First and foremost, the whole reason T-Mobile
is attracting suitors in the first place is because its
aggressive tactics are proving incredibly successful. Even if
bid emerges, continuing on its current trajectory simply means
Because of the risks involved in the Sprint deal, there is a
reportedly a $2 billion break-up fee if it falls through, up from
a previously reported $1 billion break-up fee. If Sprint proposes
a deal and it subsequently gets blocked, T-Mobile gets a handsome
T-Mobile also now has even greater negotiating leverage.
T-Mobile shareholders would be clear winners if a bidding war
emerges and a deal is completed. Sounds like a win-win-win
situation for T-Mobile.
More from The Motley Fool:
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Who Is Iliad and Why Does It Want Buy
originally appeared on Fool.com.
Evan Niu, CFA
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