In July, SoftBank (TYO:9984) and Deutsche Telekom agreed in principle on a deal for SoftBank to buyout the German telco’s stake in T-Mobile, its American branch. American regulators had started to review the terms of the agreement but the future of the acquisition was thrown in serious doubt today after French telco Iliad announced it was making a new bid. The price tag for the SoftBank deal was never announced buta href=”http://www.4-traders.com/SOFTBANK-CORP-6492452/news/Frances-Iliad-confirms-bid-for-T-Mobile-US-18830191/”>4-Traders is reporting that Iliad is willing to pay US$15 billion in cash. This is a startling development but we’ve seen this story before.
When SoftBank’s proposed acquisition of Sprint for US$20 billion was under regulatory review, satellite-TV provider Dish tried to hijack the deal with a US$25 billion offer. The sweeter deal put a scare into SoftBank but CEO Masayoshi Son was able to close out the acquisition, ultimately paying slightly more at US$21.6 billion. Iliad, however, has a stronger bargaining position than Dish did.
Dish was just another suitor – its strongest play was too offer way too much money and softly remind regulators and Sprint stakeholders that it is a family owned company born and bred on American soil. Iliad, on the other hand, has a distinct advantage in being an outsider.
Prior to the SoftBank deal, Sprint had entertained the idea of buying T-Mobile. The US Federal Communications Commission and Department of Justice both were uncomfortable with the risk of making a less competitive market and the deal never happened. Enter SoftBank. The new owner of Sprint is dealing directly with T-Mobile owner Deutsche Telekom to acquire the US branch. Different path but the same result – a merger that gets regulators nervous.
Iliad, on the other hand, is a soothing option not only for regulators but for Deutsche Telekom as well. The German firm would get more cash and would face a less protracted screening process. More money, faster. That pitch is hard to disagree with but Dish was in a similar position last year only to discover an age-old truth. Masayoshi Son gets what he wants.
We have reached out to SoftBank for comment and will update this article is we hear back.
See: SoftBank officially acquires Sprint, claims to world number three mobile company by revenue
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SoftBank acquisition of US telco threatened by $15B offer from French rival
