It seems as though there should be a new rule in the world of business. That rule is, when attempting to acquire T-Mobile USA (NYSE:TMUS), just don’t do it. Iliad is the third such company to offer T-Mobile a buyout agreement to acquire the company or to merge with it in one way or another. First, AT&T’s offer went south, sparking T-Mobile’s latest renaissance. That was followed by Sprint/Softbank who had quite a bit of openly negative regulatory opposition and ultimately gave up. And now we have Iliad, who had originally given their offer shortly before Sprint/Softbank withdrew theirs.

In a statement on the company’s website, Iliad stated that they would be pulling their offer to buy 56.6% of T-Mobile USA from parent company Deutsche Telecom. The company’s $16 billion apparently wasn’t taken very seriously by T-Mobile’s board and was rejected by the board. Iliad then came back again, with an offer to buy 67% of the company at $36 per share. Iliad’s management believed that their second offer was a solid one and that it allowed T-Mobile to accelerate their growth as the fastest growing carrier in the US and to help them accomplish that with $2 billion in savings.

Iliad did not comment on T-Mobile’s response to their second offer, but we can only assume that it was equally negative, especially considering that this new deal is for a significantly larger piece of the company for what is now a $10 premium per share over the company’s current value. While it isn’t clear what T-Mobile’s share price will do in the future, there is no doubt that they’ve got a firebrand CEO who is not afraid to say what he thinks. He recently spoke at a technology conference and discussed the industry and T-Mobile’s competitors at length and with some unexpected profanity (unless you know how he speaks).

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Once again, the T-Mobile and Sprint deal continues to move forward now that we have an actual purchase price. The Wall Street Journal is reporting that the general terms of the deal between Sprint and T-Mobile have been worked out and that the two companies have agreed to a $32 billion sale of T-Mobile, which actually seems a bit low when you consider that T-Mobile’s current market cap is $27 billion and they are getting a mere 20% premium over their current price.

This deal has gotten a lot of regulatory flak before it ever happened and will likely continue to as the two companies try to push the deal through. While few exact details are known, there is a very high likelihood that we could see the Sprint brandname go away in favor of T-Mobile’s and Sprint’s Dan Hesse replaced by T-Mobile’s John Legere. Speaking of Legere, he’s been probably one of the most outspoken CEOs in carrier history. And Sprint hasn’t been left out of his continuous Twitter bashings including this one that might come back to bite him…

Remember when people actually liked @sprint? Yeah, me either. #SprintLikeHell

— John Legere (@JohnLegere) March 6, 2014

 

The real truth of the matter is that T-Mobile’s CEO has said some pretty nasty things about Sprint, yet the company continues to move forward with the acquisition of T-Mobile by Sprint. There’s a very good chance that Sprint will take on the T-Mobile name and Legere as CEO, but it still doesn’t change the fact that most of Legere’s criticisms are accurate and while sometimes over the top, warranted.

This also does not address the biggest problem this merger will likely face, which is the regulatory approval from the FCC, DoJ and FTC. If any of those three government agencies doesn’t approve the deal, it simply won’t happen. Sprint’s parent company, Softbank, believes that it is a necessary and justified purchase after they paid $20.1 billion for Sprint. While this deal for $32 billion is vastly larger in scale, Softbank is buying a very capable competitor and one that is stealing their competitors. Furthermore, T-Mobile has a marketcap of $27 billion, which makes the $32 billion offer a 20% premium on the current market cap. The problem with this is that T-Mobile is in a much better position than Sprint right now and they’re poised to replace Sprint as #3 carrier in the US very soon. Especially when you look at the fact that T-Mobile has already surpassed Sprint as the #3 smartphone buyer in the US.

Also, let’s remember that T-Mobile’s previous attempted merger with AT&T didn’t get regulatory approval and that offer was for significantly more money ($39 billion) and when T-Mobile was a significantly weaker competitor. It just seems a bit odd that T-Mobile is now going for less money than they did when AT&T made them an offer even when they’re vastly bigger and more competitive than back then. It just doesn’t seem like this deal is big enough or good enough for T-Mobile to just walk away from essentially walking all over their competitors unless this was their plan all along… which I don’t think it was. T-Mobile’s strategy is sustainable, contrary to what everyone else in the industry (that’s for the merger) would lead you to believe. T-Mobile does not need Sprint to succeed, because they are ultimately a very broken dead weight on any potential merger.

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