M&A News: T-Mobile Snaps Up USM’s Operations, Assets for $4.4B

Wireless network giant T-Mobile (NASDAQ:TMUS) is snapping up most of U.S. Cellular’s (NYSE:USM) wireless operations and assets in a $4.4 billion deal. The announcement has pushed USM’s share price nearly 13% higher in the early session today.

New Avenue of Growth for TMUS

The deal includes USM’s wireless customers, retail stores, as well as 30% of its spectrum assets. Importantly, the move boosts TMUS’ customer base by four million while helping it acquire key spectrum rights. Both Verizon (NYSE:VZ) and T-Mobile were said to be in discussions with USM for its assets, and a final transaction with TMUS was largely anticipated this month.

USM is a regional player, and the transaction means new avenues of growth for TMUS. Moreover, the lack of new spectrum auctions has meant companies are taking the M&A route to get their hands on wireless licenses.

Under the deal, TMUS will dole out nearly $2.4 billion in cash to USM and assume its debt of up to $2 billion via an exchange offer. Furthermore, USM is retaining ownership of its other spectrum and tower assets. Notably, TMUS anticipates annual opex and capex cost synergies of around $1 billion from this deal. The transaction is anticipated to close in the middle of next year.

What Is the Target Price for USM Stock?

Today’s price surge in U.S. Cellular’s share price comes on top of a nearly 193% rally in its share price over the past year. Overall, the Street has a Moderate Buy consensus rating on the stock, alongside an average USM price target of $51. However, analysts’ views on the company could see changes following today’s M&A announcement.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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