Deutsche Telekom AG and US-based VoiceStream have signed an agreement under which Deutsche Telekom will acquire the only US wireless carrier that owns and operates a GSM network nationwide.
On Sunday, July 23, 2000, the Supervisory Board of Deutsche Telekom and the Board of Directors of VoiceStream approved the transaction, which will form the first trans-Atlantic GSM provider, with over 375 million potential subscribers based on the number of customers that can be covered by majority-controlled companies.
The primary component of the agreement consists of a share exchange. VoiceStream shareholders will receive 3.2 Deutsche Telekom shares and $30 in cash for each share of VoiceStream common stock. Calculated on the basis of 259 million VoiceStream shares, this transaction is currently valued at $50.7 billion based on Deutsche Telekom’s Euro closing share price as of Friday, July 21, 2000.
Deutsche Telekom will issue 828.8 million new T-shares from the authorised capital approved by shareholders at the Annual General Meeting on May 25, 2000. In addition, Deutsche Telekom will assume approximately $5 billion of VoiceStream net debt. It is expected that the transaction will be completed during the first half of 2001, pending approval of respective regulatory authorities.
The agreement calls for a so-called lock-up agreement with the majority of the core shareholders. These core shareholders are required to hold their Deutsche Telekom shares received in this transaction for certain periods of time.