Justice Department staffers have told T-Mobile US Inc. TMUS 0.42% and Sprint Corp. S 2.21% that their planned merger is unlikely to be approved as currently structured, according to people familiar with the matter, casting doubt on the fate of the $26 billion deal.
The nation’s third- and fourth-biggest carriers by subscribers are facing challenges on several fronts, but their most immediate hurdle comes from the Justice Department’s antitrust division, which is considering whether the deal would present an unacceptable threat to competition.
In a meeting earlier this month, Justice Department staff members laid out their concerns with the all-stock deal and questioned the companies’ arguments that the combination would produce important efficiencies for the merged firm, the people said.
Representatives for T-Mobile and Sprint had no immediate comment. A Justice Department spokesman wasn’t immediately available.
Several state attorneys general also are reviewing the deal. Some state antitrust officials have expressed concerns similar to those from the Justice Department and have prepared to sue the companies independently if federal officials don’t join them in challenging the merger, according to a person familiar with the matter.
Public filings show the Federal Communications Commission also prodding the companies for more data about several elements of their proposed combination, including the calculated cost savings and how they would use wireless infrastructure to provide home broadband service.
The different groups of government officials are operating on similar timelines and a final decision is still likely several weeks away, people familiar with the matter said. The Justice Department staff position on an antitrust reviews is a recommendation that can be overruled by leaders of the department.
Discussions between the companies and government officials are continuing. T-Mobile and Sprint could offer concessions, such as assets sales, to address the government’s concerns.
T-Mobile and Sprint unveiled their merger plans nearly a year ago. Its chiefs have said the move will give their combined firm the heft and resources it needs to build new fifth generation, or 5G, networks faster than rivals Verizon Communications Inc. and AT&T Inc.
T-Mobile’s executives have said they are still on schedule to close the deal before July. The target date has slipped since late last year, when they privately planned for a decision as soon as April, according to people familiar with the matter.
Shares of Sprint are trading at a roughly 20% discount to the price implied by the all-stock deal, signaling Wall Street doubts about the combination’s chances. Shares of T-Mobile closed Tuesday at $74.10, while Sprint closed at $6.01.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Brent Kendall at brent.kendall@wsj.com
https://www.wsj.com/articles/t-mobile-sprint-deal-runs-into-resistance-from-doj-antitrust-staff-11555446461
2019-04-16 20:52:00Z
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