TOKYO -- SoftBank Group announced on Friday that its subsidiary Sprint and T-Mobile US will amend parts of their merger agreement, in a move to reflect the current stock value.
The Japanese conglomerate will reduce its major stake from 27.4% to 24% while the offer to other shareholders will remain the same. SBG will surrender around 48.8 million T-Mobile shares acquired in the merger, close to 14% of the shares received from the transaction, to the new company immediately after closing the deal.
This will change the exchange ration in which shareholders will receive one T-Mobile share for each 11 Sprint shares they hold. In the initial agreement, signed in April 2018, it was 9.75 shares. However, if the combined entity hits stock price milestones, the company will reissue the stocks back to SBG for no additional consideration.
The revised deal reflects the decline of Sprint's stock price. The wireless carrier's shares were trading at around $6.50 when the merger was first announced, but sank below $5.00 before the Feb. 11 court ruling, due mainly to customer defections and fears of the merger being blocked. The stock price has since surged following the ruling to over $9.00.
Under the revised deal, T-Mobile parent Deutsche Telekom will hold approximately 43% of the combined entity, up from the 41.7% that the company would have held. The remaining 33% will be held by public shareholders.
The revised deal follows a ruling by a U.S. federal judge last week in favor of the $26 billion merger between the wireless carriers. The companies say the deal could close as early as April 1, and could give SBG a much-needed boost after a series of investment flops.