Deutsche Telekom has struck a US$7 billion share-swap deal with SoftBank to increase its stake in US unit T-Mobile and sold its Dutch unit in a major shake-up that strengthens the German group’s transatlantic focus.
As a result of the two deals announced on Tuesday, September 7, Deutsche Telekom will raise its stake in T-Mobile US by 5.3% to 48.4%, bringing CEO Tim Hoettges closer to his goal of securing direct control over the US$170 billion US telecoms operator.
SoftBank will in return receive cash and a 4.5% stake in Deutsche Telekom, establishing a direct shareholding relationship after the Japanese group sold its US Sprint unit to T-Mobile in a deal that closed in early 2020.
The latest transactions seek to lock down that deal by bringing Deutsche Telekom within touching distance of majority ownership over T-Mobile US – which accounts for three-fifths of group sales and is its most profitable unit.
“This is a very attractive transaction for Deutsche Telekom and its shareholders to further benefit from the value creation potential in T-Mobile US and beyond,” Hoettges said.
As part of the complex transaction, Deutsche Telekom will trigger option agreements, enabling it to lock in an average price of US$109 per share for the 65 million T-Mobile shares it is acquiring, below last week’s closing price of US$136.
Deutsche Telekom had options to lift its stake in T-Mobile US above 50%, Hoettges told a briefing, either by exercising further options or sitting out the US$60 billion in share buybacks that the US company plans in the coming years.
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