SoftBank Corp. (9984) Chief Executive Officer Masayoshi Son is exploring a deal for Sprint Corp. (S) to buy the majority of T-Mobile US Inc. (TMUS) in 2014 and has discussed financing a bid with banks such as Credit Suisse Group AG, Mizuho Bank Ltd. and Goldman Sachs Group Inc., people familiar with the matter said.
Son, who is looking for about $20 billion to finance a bid, has also met with Deutsche Bank AG and JPMorgan Chase & Co., while receiving advice from the Raine Group LLC, said the people, who asked not to be identified because the discussions are private. Those six banks are the same ones that helped finance and advise on SoftBank’s purchase of Sprint.
The plan would be to take control of T-Mobile by paying cash for the 67 percent stake owned by Deutsche Telekom AG (DTE), said the people. Sprint would then be integrated with T-Mobile, combining the third- and fourth-largest U.S. wireless carriers. Deutsche Telekom has said that it’s prepared to sell its $16 billion stake in T-Mobile, which has mostly been an unprofitable U.S. outpost for the German phone giant.
Deutsche Telekom hasn’t held any talks with Son or Sprint on its stake in T-Mobile, said two of the people, though the German company is open to selling it. While Son’s discussions with banks are at an early stage, the feedback so far is that the money is available, said one person.
One of the issues Son is discussing is how to structure a deal without a large breakup fee, two of the people said. AT&T Inc. had to pay roughly $7 billion in cash and assets when its agreement to acquire T-Mobile fell apart in 2011, following opposition from the U.S. Justice Department and Federal Communications Commission.
If SoftBank and Sprint suffer the same fate, they couldn’t afford that kind of penalty, the people said. Son, who serves as Sprint’s chairman, has told banks he doesn’t want to pay a large breakup fee because the carrier is already carrying a lot of debt, said one of these people.
The cost to insure notes of the Tokyo-based mobile carrier against non-payment rose 12 basis points to 130 basis points this week, the biggest one-day advance since June 21, according to data provider CMA. SoftBank contracts soared as high as 325 in October last year after the company announced plans to acquire Sprint.
Sprint management also is reluctant to integrate T-Mobile, a move that would require merging incompatible networks, one of the people said. Still, the company has been asked by Son to evaluate potential cost savings and regulatory obstacles, that person said.
Going after T-Mobile may put Tokyo-based SoftBank in another showdown with Dish Network Corp. (DISH) The Japanese company waged a bidding war with Dish over Sprint this year, emerging victorious in July. Dish Chairman Charlie Ergen said last month that buying T-Mobile was a possible target for his company.
T-Mobile gained 4.7 percent to $31 in New York yesterday. Sprint rose almost 7 percent while Dish gained over 1 percent. SoftBank closed 0.1 percent lower yesterday in Tokyo.
Spokesmen for Sprint, T-Mobile, SoftBank and Deutsche Telekom all declined to comment, as did representatives of Goldman Sachs, JPMorgan, Credit Suisse and Deutsche Bank. Mizuho and Raine didn’t immediately respond to a request for comment.
The Wall Street Journal reported earlier that Sprint is considering a bid for T-Mobile.