Feb 20, 2020 - Technology

SoftBank to cut its stake to get T-Mobile's Sprint deal done

Illustration: Rebecca Zisser/Axios

T-Mobile and Sprint announced a revised merger agreement that will see SoftBank getting a smaller share of the combined company, while most shareholders will receive the previously agreed upon exchange rate. The companies said they hope to get the deal as early as April 1.

Why it matters: The amended deal reflects the decline in Sprint's business, while leaving most shareholders' stake intact and removing another hurdle to the deal's closure.

Under the revised deal:

  • SoftBank will agree to reduce its stake, trading approximately 11 Sprint shares for each T-Mobile share, up from the originally agreed-upon 9.75 shares.
  • Other shareholders will get the original fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share, or the equivalent of approximately 9.75 Sprint shares for each T-Mobile share.
  • Upon close, Deutsche Telekom is expected to hold about 43% of shares, SoftBank about 24% and public shareholders about 33%.
  • The company said the revisions will have "no impact" on the cost savings, long-term profitability or cash generation expected under the merger.

Under the revised deal, SoftBank can get back some of its previously surrendered shares if T-Mobile reaches certain stock price targets.

The bigger picture: The new deal comes after a judge rejected a challenge from a number of states that had sought to block the deal on antitrust grounds.

California's Public Utilities Commission still has to approve the deal, while a judge also must sign off on a settlement reached with the Justice Department. That settlement will see the combined company sell some of its prepaid assets to Dish Network.

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Softbank threatens to pull the plug on WeWork bailout

Illustration: Aïda Amer/Axios

SoftBank yesterday threatened to pull the plug on its $3 billion tender offer for shares of WeWork, which was agreed to last fall and scheduled to close on April 1.

What’s happening: The formal message sent to investors is that SoftBank believes several deal conditions may not be satisfied, including the closing of a recapitalization of its Chinese joint venture, anti-trust approvals, and the emergence of a governmental investigation into company finances.

Scoop: WeWork tells employees that press is "mischaracterizing" SoftBank plans

Photo: Justin Sullivan/Getty Images

WeWork on Wednesday told employees that the company has plenty of access to capital and that it will keep its co-working buildings open so that its members can keep their own businesses running, according to an internal memo obtained by Axios.

The big picture: This comes after reports that WeWork's largest shareholder may bail on a $3 billion tender offer it had agreed to last fall, and as the coronavirus pandemic has made co-working less palatable to those seeking to follow social distancing recommendations.

Morgan Stanley to buy E*Trade in a $13 billion deal

Photo: Rafael Henrique/SOPA Images/LightRocket via Getty Images

Morgan Stanley is buying E*Trade Financial, the company known for helping everyday Americans manage their money, in a $13 billion all-stock deal, the investment bank said Thursday.

Why it matters: The deal signals Morgan Stanley's desire to bulk up in wealth management, a strong profit arm of its business model. As the WSJ notes, Wall Street banks have been looking for steadier sources of revenue, now that "postcrisis regulations and a long period of eerie calm in the markets" have taken a toll on profits.

Go deeperArrowUpdated Feb 20, 2020 - Economy & Business