AT&T to buy T-Mobile USA from Deutsche Telekom in $39bn move
AT&T Inc said last night that it would buy Deutsche Telekom AG to acquire T-Mobile USA in a $39bn (€27.5bn) cash-and-stock transaction that would create a new industry behemoth by combining two of the four largest US wireless carriers.
The purchase price includes a cash payment of $25bn, with the outstanding balance to be paid using AT&T common stock. AT&T has the right to increase the cash portion of the purchase price by up to $4.2bn.
As part of the deal, Deutsche Telekom will get about 8pc stake in AT&T, and a Deutsche Telekom representative will join the AT&T board.
AT&T can increase the cash component so long as Deutsche Telekom receives at least a 5pc equity stake in it.
The agreement has been approved by the boards of both companies.
AT&T said it would finance the cash portion with new debt and cash on AT&T's balance sheet. The US company has an 18-month commitment for a one-year unsecured bridge term facility underwritten by JPMorgan Chase & Co for $20bn. AT&T will not assume any debt from T-Mobile USA or Deutsche Telekom.
AT&T said the deal is expected to be accretive to earnings, excluding non-cash amortisation and integration costs, in the third year after the deal closing. The deal -- which will add 33 million subscribers to AT&T's already dominant position in the US -- is expected to close in about 12 months.