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Agencies
SoftBank Group Corp on Tuesday announced that it has entered into a strategic partnership and equity share swap agreement with Deutsche Telekom AG. Under the strategic partnership between the two companies, SoftBank’s more than 300 portfolio companies gain access to an additional, approximately 240 million DT customers across Europe and the US, providing these portfolio companies the ability to scale quickly and at a low cost. DT will benefit from ARPU increase, churn reduction and JV participation.
Under the equity share swap agreement, DT will exercise a portion of its call options that were granted by SoftBank in connection with their June 2020 agreement. DT will acquire approximately 45 million T-Mobile U.S. shares from SoftBank in exchange for issuing 225 million new DT shares to SoftBank from its authorized capital. In a subsequent step, DT envisages exercising call options to acquire another approximately 20 million TMUS shares from SoftBank by re-investing $2.4 billion of expected disposal proceeds from the announced sale of T-Mobile Netherlands. As a result of these transactions - the equity share swap and the re-investment of proceeds - SoftBank will become a 4.5% shareholder in DT and retain a 3.3% 1 equity stake in TMUS, which could increase to 6.9% through True-Up Shares, if TMUS stock price were to hit certain milestones.
The transaction diversifies SoftBank’s telecoms exposure across Japan, Europe and the U.S., with a 41% ownership of SoftBank Corp, 4.5% of DT and 3.3% 1 of TMUS. SoftBank will have access to a total of nearly 300 million customers across the globe, including approximately 55 million from SoftBank Corp, approximately 95 million from DT and approximately 140 million from TMUS.
The transaction is financially compelling. SoftBank is exchanging TMUS shares underlying primarily fixed price options with no upside, for stock in DT, which SoftBank believes has significant long-term upside beyond the agreed reference price of 20. SoftBank will become the second largest private shareholder with intended board representation.
SoftBank Group Corp on Tuesday announced that it has entered into a strategic partnership and equity share swap agreement with Deutsche Telekom AG. Under the strategic partnership between the two companies, SoftBank’s more than 300 portfolio companies gain access to an additional, approximately 240 million DT customers across Europe and the US, providing these portfolio companies the ability to scale quickly and at a low cost. DT will benefit from ARPU increase, churn reduction and JV participation.
Under the equity share swap agreement, DT will exercise a portion of its call options that were granted by SoftBank in connection with their June 2020 agreement. DT will acquire approximately 45 million T-Mobile U.S. shares from SoftBank in exchange for issuing 225 million new DT shares to SoftBank from its authorized capital. In a subsequent step, DT envisages exercising call options to acquire another approximately 20 million TMUS shares from SoftBank by re-investing $2.4 billion of expected disposal proceeds from the announced sale of T-Mobile Netherlands. As a result of these transactions - the equity share swap and the re-investment of proceeds - SoftBank will become a 4.5% shareholder in DT and retain a 3.3% 1 equity stake in TMUS, which could increase to 6.9% through True-Up Shares, if TMUS stock price were to hit certain milestones.
The transaction diversifies SoftBank’s telecoms exposure across Japan, Europe and the U.S., with a 41% ownership of SoftBank Corp, 4.5% of DT and 3.3% 1 of TMUS. SoftBank will have access to a total of nearly 300 million customers across the globe, including approximately 55 million from SoftBank Corp, approximately 95 million from DT and approximately 140 million from TMUS.
The transaction is financially compelling. SoftBank is exchanging TMUS shares underlying primarily fixed price options with no upside, for stock in DT, which SoftBank believes has significant long-term upside beyond the agreed reference price of 20. SoftBank will become the second largest private shareholder with intended board representation.
