T-Mobile USA, Inc. and SunCom Wireless Holdings, Inc. announced today that they have entered into a definitive merger agreement for the acquisition by T-Mobile USA of all of the outstanding shares of common stock of SunCom, for an aggregate of approximately $2.4 billion in cash and assumed debt. This includes cash payment of approximately $1.6 billion and $0.8 billion net debt. T-Mobile USA is a wholly owned subsidiary of Deutsche Telekom AG.
The acquisition will further enhance T-Mobile's network coverage in the southeastern United States and the Caribbean through the complementary addition of SunCom's markets and customers in North Carolina, South Carolina, Tennessee, Georgia, Puerto Rico and the U.S. Virgin Islands. SunCom operates a GSM/GPRS/EDGE network and has provided roaming service to T-Mobile in these markets since 2004.
Following the closing of the transaction, T-Mobile USA expects to fully integrate SunCom's assets into the T-Mobile network. T-Mobile is committed to providing SunCom customers with a smooth transition to T-Mobile's high-quality, innovative wireless services and products, such as its popular myFaves(TM) offering; its broad geographic reach on its highly regarded wireless network, and its industry-leading customer service.
"With the acquisition of SunCom, we will continue to implement our strategy to 'grow abroad with mobile', which is part of our overall group strategy," said Rene Obermann, chairman of the Board of Management of Deutsche Telekom. "At the same time we can realize significant synergies on the cost side and improve our market presence. As a result, this acquisition will fit very well with our strategy to grow abroad with mobile primarily within our current footprint within the context of market consolidation."
Robert Dotson, president and chief executive officer of T-Mobile USA, said, "The strategic fit of the SunCom operations will make this a near-perfect acquisition. It will round out our domestic footprint, allowing us to serve 98 of the top 100 markets, and will significantly benefit our financial position by reducing roaming expense. Furthermore, it will add a talented group of employees that will enable us to serve more than one million new SunCom customers with industry-leading national products and services available under the T-Mobile brand."
By agreeing to acquire SunCom, T-Mobile USA expects to expand its own nationwide coverage (excluding roaming) significantly, from 244 million PoPs to 259 million PoPs. T-Mobile USA also expects to realize synergies with a net present value (NPV) of approximately $1 billion through reduced roaming and operating expenses. Plus, the company anticipates further upside growth opportunities through the addition of the new markets.
Michael E. Kalogris, chairman and chief executive officer of SunCom, said, "We are extremely pleased to be combining with T-Mobile USA, a customer-focused, nationwide provider of wireless services, with whom we have been a long-time roaming partner. This transaction is a testament to all that SunCom has achieved - transforming this Company through our financial and operational restructuring into the growing, profitable business it is today, while offering customers exceptional service and products. We look forward to building on this momentum as part of T-Mobile USA."
Certain investment funds affiliated with Highland Capital Management, L.P. and Pardus Capital Management, who together own more than 50% of SunCom's issued common stock, have committed to vote in favor of the transaction.
At the end of the second quarter of 2007, SunCom had more than 1.1 million customers (up by over 105,000 compared to June 30, 2006), with more than 95 percent of postpaid subscribers, and a total revenue of $242.5 million (up from $206.7 million a year ago).
Under the terms of the agreement, approved by the boards of both companies, holders of SunCom common stock will receive $27 per share in cash. Including net debt as of June 30, 2007, the total transaction value is approximately $2.4 billion. The $27 per share purchase price represents a premium of 22.7 % over the closing price of SunCom common stock on the New York Stock Exchange on Friday, September 14, the trading day prior to signing of the definitive merger agreement. The acquisition, which is subject to governmental and regulatory approvals, approval by SunCom shareholders and other customary closing conditions, is expected to close in the first half of 2008.