Sprint and T-Mobile merger may be put on hold

Sprint and T-Mobile merger may be put on hold

On Behalf of | Jun 20, 2019 | Mergers & Acquisitions |

Mergers can be a great way to further business’s interests by increasing their market share, broadening their services, allowing them to enter new markets, and reducing costs. The process can be enormously complex, though, even when the businesses involved in a merger are relatively small.

This is because there can be a variety of terms to negotiate before an agreement can be finalized. These terms can dictate everything from power structure, management style, and the timing of the merger. The specifics of each of these terms can have serious ramifications moving forward, which is why they have to be carefully negotiated and crafted.

Communications giants Sprint and T-Mobile have been trying to do just that. By merging, the companies hope to expand 5G accessibility and obtain a market share that competes with AT&T and Verizon, each of which control one-third of the market. The deal is valued at $26 billion and was headed toward success. Yet, just recently the attorneys general of 10 states filed a lawsuit to try to block the deal from going forward.

These officials have a number of concerns with the deal, but they all essentially boil down to concerns regarding antitrust laws. They indicate that the merger will cost Spring and T-Mobile customers $4.5 billion, and that low income families will suffer the most despite Sprint and T-Mobile’s claims that the merger will benefit rural areas. Essentially, the lawsuit revolves around concerns that the merger will limit competition and allow the company to have so much power that it can control the market rather than the market controlling it.

Although most mergers don’t have to worry about anti-trust issues, this case does highlight the importance of considering every aspect of the transaction before expending the time and money to negotiate it. By being thorough up front, businesses can better ensure that their mergers will be smooth and beneficial. Skilled business law attorneys stand ready to help with this process.