French Internet and mobile firm Iliad said it has discontinued its pursuit of T-Mobile US (NYSE:TMUS), arguing that Deutsche Telekom and T-Mobile "refused to entertain" its offer to acquire the U.S. operator.
Iliad made its initial $15 billion bid for 56.6 percent of T-Mobile in July, valuing the carrier at $33 per share. DT responded that the bid was too low.
Iliad said that it subsequently "put in place a consortium with two leading private equity funds and Tier-1 international banks allowing it to improve significantly the terms of its offer by enhancing the cash amount and increasing the share of T-Mobile US' capital to be acquired from 56.6% to 67%." Iliad said its new offer valued T-Mobile at around $36 per share. Reports had indicated that Iliad was making an improved offer for T-Mobile over the initial offer in July.
"Iliad had the ambition to accelerate T-Mobile US' transformation, notably by saving more than $2 billion of cost annually," said the French company, which is controlled by billionaire entrepreneur Xavier Niel. "This transaction would have created significant value for both Iliad's and T-Mobile US' shareholders."
However, Iliad today said it is dropping its offer for T-Mobile.
The collapse of Iliad's offer for T-Mobile is not a surprise. Macquarie Capital analyst Kevin Smithen recently wrote that DT was unlikely to agree to a sale of T-Mobile "given T-Mo's current momentum and potential for other, better-capitalized bidders down the road. In our opinion, investors should NOT own T-Mo for any M&A over at least the next two years."
Indeed, T-Mobile reported that August was its best month ever for U.S. postpaid subscriber additions and analysts expect it to report strong third-quarter results, with that momentum carrying over into the fourth quarter.
Earlier this month, T-Mobile US CEO John Legere dismissed all of the rumors surrounding the carrier's potential M&A activity as "craziness" and said T-Mobile would continue to try to grow organically. Legere also trained his fire on Iliad and Niel: "I can tell you everything you need to know about Iliad," Legere said. "The owner is wealthy, he's got long hair, he made his money in porn and his wife is the heir to Louis Vuitton money."
Iliad declined to comment on Legere's remarks, according to Bloomberg.
- see this Iliad release
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