T-Mobile US Inc., the most eligible company in the U.S. wireless industry, has another suitor on its hands. Upstart French telecom company Iliad SA on Thursday said it has offered $15 billion for a majority stake, reports ABC News.
Iliad is injecting itself into the courtship of T-Mobile, the fourth-largest US cellphone carrier, and Sprint Corp., the No. 3. Sprint has reportedly been in talks with T-Mobile for months, but no deal has been announced. Analysts believe U.S. regulators are likely to block the T-Mobile/Sprint pairing due to concerns that it would reduce competition and thus raise prices for consumers.
Iliad is much smaller than T-Mobile US, and it doesn't have the financial might to buy the whole company. It's offering $15 billion in cash for 57 percent of T-Mobile US, at $33 per share. That's less than Sprint's reported offer of around $40 per share.
Iliad, however, claims that the shares it doesn't buy will be worth $40.50 each thanks to "synergies" between Iliad and T-Mobile, indicating that it thinks the combined business will be able to expand more rapidly or cut costs. However, cross-border deals in telecommunications rarely yield substantive synergies.
T-Mobile confirmed that it received Iliad's proposal and said that it will have no further comment. Iliad said it did not have a response from T-Mobile's board.
T-Mobile shares jumped $2.07, or 6.7 percent, to $33.01 after Iliad's announcement, indicating that investors believe there's some chance of an improved offer, either from Iliad or Sprint. The stock started moving up before the announcement, as The Wall Street Journal reported some details of the offer.
Read more of this AP report from ABC News.