AT&T to Buy T-Mobile USA for About $39B

Features Reuters

AT&T Inc said on Sunday it would buy Deutsche Telekom AG's T-Mobile USA, in a $39 billion cash-and-stock transaction that would create a new industry behemoth by combining two of the four largest U.S. wireless carriers.

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The purchase price includes a cash payment of $25 billion with the balance to be paid using AT&T common stock. AT&T has the right to increase the cash portion of the purchase price by up to $4.2 billion.

As part of the deal, Deutsche Telekom will get about 8 percent stake in AT&T, and a Deutsche Telekom representative will join the AT&T board. AT&T can increase the cash component so long as Deutsche Telekom receives at least a 5 percent equity stake in it.

The agreement has been approved by the boards of both companies.

AT&T said it would finance the cash portion with new debt and cash on AT&T's balance sheet. AT&T has an 18-month commitment for a one-year unsecured bridge term facility underwritten by JPMorgan Chase & Co (JPM.N) for $20 billion.

AT&T will not assume any debt from T-Mobile USA or Deutsche Telekom.

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AT&T said the deal is expected to be accretive to earnings, excluding non-cash amortization and integration costs, in the third year after closing.

The deal is expected to close in about 12 months.

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