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Over the weekend Sprint and T-Mobile announced again that they would try to merge.

Assuming the powers that be in the US don't have any issue with this deal and it moves forward as proposed, what does it mean for me as a shareholder?

I have 2,000 Sprint shares, and as part of the deal it looks like one Sprint share will be worth ~10% of a T-Mobile share as of the price on Friday.

So does that mean that, if this goes through in early 2019, my 2,000 Sprint shares would turn into 200 T-Mobile shares? What if the price of Sprint stock goes up from here? What if it craters? Is this price/ratio set in stone?

If my stock does get converted, does that happen automatically? Will Fidelity all of a sudden show that I own TMUS stock instead of S?

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The deal is 1 share of TMUS for every 9.75 shares of S. If it goes through then you will receive 205.13 shares of TMUS for your 2,000 shares of S. If Fidelity does't deal with fractional shares then you'll receive 205 shares and the cash equivalent of .13 shares. They will handle the share exchange transaction for you. I don't deal with them so I don't know if they charge an administrative fee (commission) for such a transaction.

When the deal goes through will depend on how long it takes for the DOJ to approve it, if it does. So maybe it's a done deal this year. Maybe next year.

The price/ratio is set in stone once a merger deal is agreed and signed. Your concern isn't the price of S shares but that of TMUS since that's what you will ultimately end up owning.

  • If the deal is truly set in stone, there either won't be any S shares at all, or arbitrage trading will keep it at the fixed ratio. – Acccumulation Apr 30 '18 at 18:12
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    And that's why the concern is what happens to the share price of TMUS. going forward. – Bob Baerker Apr 30 '18 at 19:57
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    S will exist until the deal is consummated, and you should expect the price to approach 1/9.75 the price of TMUS, less a bit for some uncertainty about the deal actually happening (with the amount less a measure of that uncertainty). – blm May 2 '18 at 23:21
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The price of your Sprint shares will depend heavily on the regulatory process that will ensue as this type of massive merger has to reviewed. Some theories that I have been reading a bit about echo my prior investment thesis which is that we will see a bit of a head fake. The stock rallied over $6.00 on Tuesday over the talks of merger and then promptly dropped. According to the deal and the announcement of the valuation is pricing Sprint at fifty nine billion dollars. Which can be a bit of a problem for investors given the stock has traded way over this range over the past year. The main problem with either determining whether to hold, increase or decrease your Sprint position is the regulation. AT&T dealt with this when trying to merge with T Mobile back in 2011, and now AT&T is trying to merge with Time Warner. The major factors to take into account here lie in the regulatory and competition aspect of this sector. Analysts expected both Sprint and T Mobile to outperform, and they expect them to continue to outperform. Sprint is a buy if the stated price of acquisition stays at $6.62 and the regulatory process allows it to happen. However, the competition aspect still needs to be taken into account even once the acquisition happens (if it does). Bank analysts will most likely hold their thesis that Sprint and T Mobile will outperform AT&T regardless of acquisition.

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