It already became apparent from Deutsche Telekom AG (ETR:DTE) that it was reluctant to sell its 67% stake in T-Mobile US Inc (NYSE:TMUS). This is after spurning off several propositions from different suitors. The French upstart company Iliad SA (EPA:ILD) had made about two bids that were all rejected before making a more improved bid that would see the company buy 67% stake of T-Mobile at $36 a share.
However, the company took an about-turn yesterday when it made it clear that it had withdrawn its bid for T-Mobile US Inc (NYSE:TMUS), citing resistance from Deutsche Telekom AG (ETR:DTE). The French upstart had earlier submitted a bid of $15 billion and later $33 a share for 56.6% stake, but both were equally spurned. The withdrawal brings an end to the push-and-pulls that have characterized the process for the past 4 months.
“Thank God this is over,” said Heinz Steffen, an analyst at Fairesearch GmbH in Kronberg, Germany. “The offer was a joke. I think Iliad really meant it seriously given the resources they invested in the process, but it was a desperate attempt of the small guy buying the big guy.”
Under the stewardship of Deutsche Telekom AG (ETR:DTE) CEO Tim Hoettges, who took over the leadership position in January, the company has opted for a wait-and-see approach with the hope that T-Mobile US Inc (NYSE:TMUS) will continue to progress is the U.S. market, according to sources familiar with the matter. And indeed, the U.S. Company posted Q2 profit after registering losses in the past four consecutive quarters.
“They believe that T-Mobile can take care of itself,” a person close to the German firm’s management said. “That has been Tim’s objective ever since he merged the company with MetroPCS last year.”
Some other companies that had also abandoned their push for the acquisition of T-Mobile US Inc (NYSE:TMUS) are AT&T that offered $39 billion in 2011, Sprint Corporation that was seeking a merger. The deal by AT&T was however blocked by U.S. regulators.
This article has been written by Victor Ochieng.
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