Reuters
- Sprint stock rocketed more than 75% in pre-market trading on Tuesday.
- The rally came after a federal judge approved Sprint’s mega-merger with T-Mobile.
- The two mobile carriers agreed to merge in April 2018, but authorities worried the deal would reduce competition and raise prices.
- Visit Business Insider’s homepage for more stories.
- Watch Sprint trade live.
Sprint stock rocketed more than 75% in pre-market trading on Tuesday after a federal judge approved the company’s proposed mega-merger with T-Mobile.
America’s third- and fourth-largest mobile carriers agreed to join forces in April 2018, but authorities held up the $26 billion all-stock deal as they worried it would reduce competition and increase prices for consumers.
The two carriers agreed to help build a new rival carrier and offer the same or better-value plans to customers in order to win approval from federal antitrust officials and industry regulators. The latest judgment comes after a coalition of state attorneys general argued the merger could increase device prices and service charges, The Wall Street Journal reported. They may still appeal the decision.
Judge Victor Marrero cleared the merger without conditions, The Financial Times reported.
Sprint’s shares soared to $8.50 in pre-market trading, a premium to their valuation of $6.62 under the merger terms (the value of 0.10256 T-Mobile shares based on their closing price of $64.52 on April 27, 2018). The rally lifted Sprint’s market capitalization by roughly $14 billion to almost $35 billion.
T-Mobile shares climbed by about 10% to $93 in pre-market trading, boosting the carrier’s market capitalization by about $6 billion to nearly $80 billion.
The enlarged T-Mobile is set to have more than 90 million US customers, putting it on a more even footing with industry titans AT&T and Verizon, The Journal said. Deutsche Telekom will own about 42% of the new company, SoftBank will own 27%, and the rest of the shares will be publicly owned.
When Sprint and T-Mobile announced the deal nearly two years ago, they expected to realize more than $6 billion in annual cost savings. They also predicted they would make more than $53 billion in annual revenue and $22 billion in adjusted profits.
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