Iliad SA share price down, drops plans to acquire a majority stake in T-Mobile

Iliad SA said in an official statement that it dismissed plans to purchase a majority stake in T-Mobile U.S. Inc. after a larger acquisition offer was turned down by its parent Deutsche Telekom AG.

After the previous acquisition offer of Iliad was turned down, it shared in a statement that the bid had been based on its “ambition to accelerate T-Mobile US’s transformation”. The company added: “This transaction would have created significant value for both Iliad’s and T-Mobile US’s shareholders.”

The improved bid of Iliad for 67% of T-Mobile amounted to $36 per share including cost savings. According to a person with knowledge of the situation, who asked not to be identified because the information is still private, the offer was estimated to $33 per share excluding those synergies. This means the bid actually remained unchanged from the previous $15-billion cash offer for a 56.6% stake, which was rejected in August after T-Mobile described it as insufficient.

The $15-billion proposal by founder and largest investor in Iliad – Mr. Xavier Niel – was considered a bold move. However, some analysts shared their concerns that the France-based company doesnt have the financial stability to strike such a deal. Iliads stock has fallen about 25% since Mr. Niel confirmed the company is interested in purchasing T-Mobile in late July.

As reported by the Financial Times, after its initial bid for T-Mobile was rejected, Iliad revealed that it intended to approach the company through a consortium with two private equity funds and international banks, which would allow it “to improve significantly the terms of its offer by enhancing the cash amount and increasing the share of T-Mobile US’s capital”.

Iliad SA closed 1.79% lower on Monday in Paris at €156.15 per share, marking a one-year change of -8.60%. The company is valued at €9.07 billion. According to the Financial Times, the 15 analysts offering 12-month price targets for Iliad SA have a median target of €207.00, with a high estimate of €300.00 and a low estimate of €140.00. The median estimate represents a 32.56% increase from the last price of €156.15.