French mobile and Internet firm Iliad has set a deadline of mid-October to either make an improved offer to take control of T-Mobile US (NYSE:TMUS) or abandon its pursuit, according to a Reuters report.
The report, citing unnamed sources, also comes as Bloomberg reported that Iliad is facing obstacles to securing financing for a new bid. Meantime, T-Mobile parent Deutsche Telekom reportedly is undecided over whether it wants to sell the unit at all.
Reuters reported that Iliad is currently in talks with several U.S. banks to help fund an improved offer. The company is also looking to work with private equity funds, including buyout firm KKR, to raise about $5 billion to $6.5 billion. Under the deal structure proposed by Iliad, DT would have to keep a stake in the combined company, Reuters reported.
Meanwhile, the Bloomberg report, which also citing unnamed sources, said that talks between Iliad and potential partners, including KKR, have not yet resulted in a higher bid, and that Iliad has discussed raising as much as $5 billion in additional debt and equity for a new bid.
Representatives for Iliad, Deutsche Telekom T-Mobile and KKR declined to comment, according to Bloomberg.
Iliad CFO Thomas Reynaud has said the company might make an improved offer by working with unnamed partners. In late July Iliad made its initial $15 billion bid for 56.6 percent of T-Mobile, valuing the carrier at $33 per share. T-Mobile parent Deutsche Telekom rejected that offer as too low.
According to Reuters, Iliad's management team has finished meetings with potential U.S. investors and is waiting for feedback. The report said Iliad might make a new offer in the second week of October, of between $35 and $40 per share for a stake in T-Mobile of between 60 percent and 90 percent.
Last week financial analysts at Jefferies wrote in a research note that T-Mobile would strike an M&A deal with another company only if that partner had U.S. spectrum, had a U.S. customer base and offered "favorable financial terms." That would seem to rule out Iliad, which has no presence in the U.S. market.
Unnamed sources close to Iliad told Reuters that the Jeffries report could have been part of DT's negotiating strategy with Iliad, with DT hoping to get a better deal. While DT would still like to get out of the U.S. market, Reuters said, the company is under no pressure to strike a deal. T-Mobile has been on a tear the past six quarters in terms of subscriber growth, and CEO John Legere recently said that August was the company's best month ever in terms of postpaid net additions.
Deutsche Telekom board members are split over whether the company should part with its only growing asset, Bloomberg reported. DT may wait until after the AWS-3 spectrum auction, which starts Nov. 13, before making any strategic decisions about T-Mobile, the report added.
- see this Reuters article
- see this Bloomberg article
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Iliad remains open to improving its bid for T-Mobile US