French telecommunications company Iliad has pulled the plug on its plans to acquire Bellevue-based T-Mobile, citing exchanges with the boards of Deutsche Telekom and T-Mobile which refused to entertain an enhanced offer.
“Iliad had the ambition to accelerate T-Mobile US’ transformation, notably by saving more than USD 2 billion of cost annually. This transaction would have created significant value for both Iliad’s and T-Mobile US’ shareholders,” Iliad wrote in a press release issued today. Shares of T-Mobile dropped three percent on the news.
At the GeekWire Summit earlier this month, T-Mobile CEO expressed doubts about the Iliad buyout.
“This is someone who is trying to raise money because he’s fascinated with T-Mobile,” said Legere of Iliad’s Xavier Neil. “Here’s the plug line: I have a fiduciary obligation to shareholders to look at any and all offers that come into the company. Bullshit. So, we will see.”
Legere earlier dubbed Neil as “that porn guy,” referring to the sex-oriented chat site that Neil owned in the 1990s.
Legere also suggested that more M&A deals will pop up, given T-Mobile’s growth in recent months.
“My strategy has been to continue to grow, and focus on what we’re doing,” said Legere. “I don’t want my employees getting their heads on sideways – they still have PTSD from when AT&T tried to buy us.” T-Mobile continues to add customers, reporting that August was its best month to date as it eyes surpassing rival Sprint in subscribers.
Iliad made an initial $15 billion bid for 56.6 percent of T-Mobile in July, but the following month the fourth largest carrier in the U.S. said it would not accept the deal.
You can see Legere’s remarks starting in about minute 5 of the video below:
Here’s the full press release from Iliad this morning:
The Iliad Group announces that it puts an end to its project of acquiring T-Mobile US, following exchanges with Deutsche Telekom and selected board members of T-Mobile US who have refused to entertain its new offer.
At the end of July 2014, Iliad confirmed its interest in the US market and that it had submitted to the T-Mobile US board of directors an indicative offer to purchase a 56.6% stake in the company. This offer was rejected by the T-Mobile US board despite the significant premium offered.
Following this offer rejection, Iliad put in place a consortium with two leading private equity funds and Tier-1 international banks allowing it to improve significantly the terms of its offer by enhancing the cash amount and increasing the share of T-Mobile US’ capital to be acquired from 56.6% to 67%. This new offer, at about USD 36 per share (cash + share of value creation), would have fitted into Iliad Group’s strict financial policy in terms of indebtedness and dilution.
Iliad had the ambition to accelerate T-Mobile US’ transformation, notably by saving more than USD 2 billion of cost annually. This transaction would have created significant value for both Iliad’s and T-Mobile US’ shareholders.
The Iliad Group will continue its profitable growth policy as it has been conducted over the last 15 years in the interest of its subscribers, employees and shareholders.
The Iliad Group is the parent company of Free, the company that invented the Freebox – the first multiservice ADSL box. Free has developed a whole range of innovative products for the broadband market (VoIP, IPTV, flat-rate calling plans to a range of destinations, etc.). Free offers straightforward and innovative services at attractive prices. At the end of 2010, Free released Freebox Revolution, the sixth-generation Freebox, which includes network attached storage (NAS) and a Blu-rayTM drive. Free was the first operator to offer landline to mobile calls in a box package and the first to include calls to French overseas departements. In January 2012, Free opened up the mobile market with simple, affordable, pay-as-you-go services. Free has over 14.8 million subscribers (over 5.7 million broadband subscribers and over 9 million mobile subscribers (as at June 30, 2014). Iliad was ranked 29th worldwide in the Forbes list of most innovative companies in 2013.