Sprint Corp.’s share price down, advances towards a 32-billion-dollar acquisition of T-Mobile

According to people familiar with the process, Sprint Corp. is coming closer to an agreement on the price, termination fee and capital structure of the T-Mobile U.S. Inc. takeover. The acquisition could estimate the wireless carrier at almost 40 dollars per share.

The two companies are reported to have reached an agreement on the broader picture of the deal, which values T-Mobile at about 32 billion dollars. This is how the third- and fourth-biggest wireless phone carriers in the U.S. are heading to joining their businesses following the consolidation trend in the countrys telecommunications industry.

Sprint Corp. and T-Mobile U.S. Inc. have been negotiating about an eventual deal for years, but the talks have been on and off, while each of the companies have been focused on other transactions. In addition, both companies have been put under close examination by the antitrust regulatory authorities.

According to the people, who asked not to be named because the talks are still not public, Sprint Corp. will offer about 50% stock and 50% cash for acquiring T-Mobile. Sprint also plans to leave T-Mobiles parent Deutsche Telekom AG with a stake of about 15%.

The people close to the acquisition talks also said that the terms of the deal involve Sprint paying about 40 dollars per share for T-Mobile, which makes the equity value of T-Mobile about 31 billion dollars and represents about 17% premium to the companys closing price on Wednesday. They also reported that the takeover could be finalized as soon as July.

After the deal is completed, it would bring together the third- and fourth-biggest wireless companies in the U.S. The merger would help both Sprint and T-Mobile to join their efforts into a larger and more consolidated company that would be able to be a worthy rival of the current leaders in the industry – AT&T Inc. and Verizon Communications Inc. None of the two smaller companies would have the financial resources to compete against the leaders in the business segment or be able to attract enough users to beat the number of customers held by some of the bigger players.

The takeover needs to be approved by both the Federal Communications Commission and the Justice Department.

One of Sprint Corp.s spokesmen – Mr. Bill White refused to make any comments. T-Mobiles spokeswoman Anne Marshall did not respond to the requests asking her to comment the situation.

Sprint Corp. was 1.05% down to close at 9.40 dollars per share yesterday. According to the information published on CNN Money, the 22 analysts offering 12-month price forecasts for Sprint Corp. have a median target of 8.00, with a high estimate of 10.50 and a low estimate of 5.00. The median estimate represents a -14.89% decrease from the last price of 9.40.