Yesterday evening, German Deutsche Telekom and U.S. AT&T announce that AT&T will buy T-Mobile USA, an affiliate of Deutsche Telekom, for US$ 39 billion. This has been agreed by the boards of the two companies yesterday. Deutsche Telekom will receive US$ 25 billion in cash and US$ 14 billionin shares of AT&T. AT&T has the right to increase the portion of the purchase price paid in cash by up to US$ 4.2 billion with a corresponding reduction in the stock component. With an interest in AT&T of up to 8 % Deutsche Telekom will become the biggest minority shareholder and is to receive one seat on AT&T's Board of Directors.
The value of the transaction is approximately 28 billion Euro, whereof approximately 18 billion Euro are in cash and approximately 10 billion Euro in stock (based on current exchange rates). Thus T-Mobile is valued at seven times the adjusted EBITDA of the business year 2010 in this transaction.
After the closing of the transaction Deutsche Telekom plans to use approximately 13 billion Euro of the proceeds to reduce its debts. Approximately 5 billion Euro are planned to be used for share buybacks after closing and required resolutions in accordance with the legal requirements. For Deutsche Telekom this transaction leads to a further consolidation of the balance sheet. Pro forma the ratio for net debt to adjusted EBITDA in 2010 would have fallen to 1.9x from 2.2x.
The merger still needs to be approved by both, the US Department of Justice (DoJ) and the US regulation authority Federal Communications Commission (FCC). The closing of the transaction is expected to take place in the first six months of 2012.
Cheers ~ Arne