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Upcoming/New CFIUS Filing: Deutsche Telekom/T-Mobile US and Sprint Corporation

Status:  Upcoming/New Filing

Acquirer:  Deutsche Telekom AG (Germany); T-Mobile US, Inc. (US)

Acquired:  Sprint Corporation (US)

Value:  Approximately US$59 billion

Industries:  Telecommunications


On April 29, 2018, T-Mobile US, Inc.,  a publicly traded US wireless communications provider majority owned by Germany global telecommunications company Deutsche Telekom AG, announced that it entered into a merger agreement with Sprint Corporation, a publicly traded US wireless communications provider majority held, through two US holding companies, by the Japan based SoftBank Group Corporation.  (See T-Mobile US, Inc., Form 8-K, Apr. 30, 2018, SEC Filing.) Pursuant to the agreement, the SoftBank Group will merge its US holding companies (that hold the Sprint Corp. interest) into Huron Merger Sub LLC, a wholly owned subsidiary of T-Mobile US, with Huron Merger Sub LLC continuing as the surviving entity and as a wholly owned subsidiary of T-Mobile, and in exchange, SoftBank Group will indirectly acquire shares in T-Mobile US, Inc. (Id.) Immediately following this, Superior Merger Sub Corporation, a wholly owned subsidiary of Huron Merger Sub LLC, will merge with and into Sprint Corporation, with Sprint Corporation continuing as the surviving corporation and as a wholly owned indirect subsidiary of T-Mobile US.  (Id.)  Immediately following these merger transactions, “Deutsche Telekom and SoftBank are expected to hold approximately 42% and 27% of the fully diluted shares of T-Mobile Common Stock, respectively, with the remaining approximately 31% of the fully diluted shares of T-Mobile Common Stock held by public stockholders.” (Id.)  The transaction is subject to a “favorable completion of review by the Committee on Foreign Investments in the United States.”  (Id.; see Section 7.1(c)(iii), Business Combination Agreement, T-Mobile US, Inc., Form 8-K, Ex-2.1, Apr. 30, 2018, SEC Filing.) In addition, the transaction is conditioned on approval by DSS of “a plan to operate pursuant to a FOCI mitigation agreement those NISPOM covered activities of T-Mobile, Sprint and their respective subsidiaries . . .” (Id.)  “Both Sprint and T-Mobile currently have separate mitigation agreements with the national security agencies as a result of their non-U.S. ownership.”  (See T-Mobile US, Inc., Form-425, June 20, 2018, SEC Filing.) As of June 20, 2018, the parties had yet to file a formal CFIUS notice.  (See Sprint Corp. Form 425, June 20, 2018, SEC Filing.)

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