Softbank Corp in direct talks with Deutsche Telekom for possible T-Mobile deal- sources

By Nicel Jane Avellana

Jan 17, 2014 11:12 PM EST

Sources told Bloomberg that Softbank Corp is talking directly with Deutsche Telekom AG to iron out hurdles leading to a possible acquisition of T-Mobile US Inc. The report said Softbank is looking to merge its own Sprint Corp with T-Mobile.

One of the sources said that even if Softbank already obtained assurances from lenders that there will financing for the acquisition, it could still be months before a deal can be agreed upon. The two sources who spoke on the condition of anonymity because the information is confidential said some issues that still needed to be threshed out include the price that Softbank will pay for the 67% stake of T-Mobile owned by Deutsche Telekom and how the two companies will be consolidated.

One source told Bloomberg that Deutsche Telekom prefers an all-cash offer for T-Mobile whose market value is pegged at around $26 billion. The person said Softbank aims to fund a deal that would give as much cash as possible. Last month, sources also told Bloomberg that Masayoshi Son, Softbank Founder and President, is looking to borrow an estimated $20 billion from Goldman Sachs Group Inc, Mizuho Bank Ltd and Credit Suisse Group AG.

The report said a merger of Sprint and T-Mobile would give both firms a better shot at succeeding against rivals AT&T Inc and Verizon Communications Inc in the long-term. Citing another person, the report said the deal talks are not controlled by the management of Sprint and that they know that the decision to proceed with the deal or not will be made by Son.

One of the sources said no structure has yet been formed for the deal and that the boards of Deutsche Telekom, Softbank, Sprint and T-Mobile must also reach an agreement. People have also warned regulators could object to the potential acquisition, the report said.

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