Sprint Nextel is in the early stages of deciding whether to make a bid for MetroPCS Communications and counter an offer from Deutsche Telekom, three people familiar with the situation said.
MetroPCS’s stock rose 3.7 percent to close at $12.69 after Bloomberg News reported on the discussions, rebounding from a decline of as much as 10 percent. Shares of Sprint, the third-largest U.S. wireless carrier, fell 2.1 percent to $5.09.
Sprint is crunching the numbers and meeting with its advisers to weigh the feasibility of a higher offer, said the people, who asked not to be identified because the discussions are private. The Overland Park, Kan., company could decide as early as next week whether to pursue a deal, two of the people said.
Sprint’s board is meeting in the next two days to discuss the matter, one person said.
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“It would make sense for Sprint to look at MetroPCS,” said Tom Burnett, director of research at Wall Street Access, an investment firm in New York. “The networks are compatible and that might make it easier.”
Deutsche Telekom, Germany’s biggest phone company, announced plans Wednesday to merge its Bellevue-based T-Mobile USA subsidiary with MetroPCS. The move would create a bigger rival to Sprint and market leaders Verizon Wireless and AT&T.
Sprint Chief Executive Dan Hesse has said his company will play a role in industry consolidation, raising speculation he will step in.
Scott Sloat, a Sprint spokesman, declined to comment on potential counter-bids. Andreas Fuchs, a Deutsche Telekom spokesman, also declined to comment, as did MetroPCS.
One issue that may hinder a Sprint counteroffer is the breakup fee, said one of the people. MetroPCS would pay $150 million if it backs out of its current deal. The reverse breakup fee for T-Mobile is $250 million.
Deutsche Telekom is prepared for a counter-bid from Sprint and would consider better terms if necessary, according to another person familiar with the matter.
The value of the joint company, which would be based in Bellevue, may be derived from the price of MetroPCS shares, which would account for 26 percent of the whole entity.
Based on the stock’s closing price of $12.24 Wednesday, the Richardson, Texas, company’s equity may be priced at about $3 billion, excluding expected dividends. That implies an equity value of $11.4 billion for the combined company, excluding liabilities, according to data compiled by Bloomberg.
Accounting for joint net debt of $21.4 billion, the enterprise value would total about $32.8 billion.
The combined entity would have sales of $24.8 billion and 42.5 million subscribers — still less than Sprint. Even so, Sprint may be so disadvantaged by the combination that it would have to make a counteroffer, Robin Bienenstock, a Sanford C. Bernstein & Co. analyst, said in a note to investors.
Sprint abandoned plans earlier this year to buy MetroPCS after Sprint’s board rejected the transaction, two people familiar with the plan said in February. That deal may have cost as much as $8 billion including debt, they said.
Since then, Sprint shares have more than doubled, making it easier to do a stock purchase. MetroPCS has a market value of $4.61 billion, while Sprint is valued at about $15.3 billion.