Iliad, the French mobile carrier that was the most recent suitor to propose a marriage with T-Mobile, gives up on its ambitious dreams to merge with the fourth largest wireless carrier in the United States.
In a statement posted on Monday, Iliad says German company Deutsche Telekom AG and T-Mobile board members have continuously rebuffed Iliad's offers to acquire the Un-carrier. The first bid was made at the close of negotiations for the cancelled merger between Sprint and T-Mobile, where Iliad put up a $15 billion cash proposal or $33 per share for 56.6 percent of the company. Following, T-Mobile's rejection of its second offer of $36 a share for 67 percent of the company, one in which Iliad chalked up financing deals for with private equity funds and international banks, Iliad says it is no longer pursuing T-Mobile.
"The Iliad Group announces that it puts an end to its project of acquiring T-Mobile U.S., following exchanges with Deutsche Telekom and selected board members of T-Mobile who have refused to entertain its new offer," says (pdf) Iliad.
Iliad says it could have created significant value for T-Mobile's shareholders by saving the company up to $2 billion in yearly expenses. Iliad, which was founded by billionaire Xavier Niel, had seen its shares skyrocket in June when it began offering aggressively priced mobile phone and landline plans to the French market, a strategy that T-Mobile's John Legere is also know for. The company says it will continue to pursue its "profitable growth policy" as it has done so for the last 15 years.
"Thank God this is over," says analyst Heinz Steffen at Fairsearch GmbH in Kronberg, Germany. "The offer was a joke. I think Iliad really meant it seriously given the resources they invested in the process, but it was a desperate attempt at the small guy buying the big guy."
Iliad shares dropped to 156.15 euros on the Paris trading floor following the announcement, creating a 24 percent stock decline since the company made public its interest in T-Mobile in July. Iliad is valued at 9.1 billion euros or $11.6 billion, while T-Mobile has a market capitalization of $21.7 billion. T-Mobile shares also took a 69-cent dip to $26.02 in New York.
T-Mobile, which has been steadily growing in recent months, is the subject of several acquisition bids in the past, including a proposed buyout by AT&T in 2011 that was cancelled due to regulatory opposition and the recently thwarted plans to combine with Sprint. With Sprint and Iliad out of the way, the next suitor expected to offer a bid is satellite TV provider Dish Network, which has expressed interest in T-Mobile early in September.
Deutsch Telekom, which gets a third of its revenue from T-Mobile, is looking to sell its majority stake in the company to focus on its assets abroad. However, insider sources say the German company's executives are waiting out a frequency auction to take place in November before deciding T-Mobile's fate.