Iliad SA share price down, aims for larger stake in T-Mobile

According to people with knowledge of the situation, who asked not to be named because the information is still private, Iliad SA is planning to make a new bid for a larger stake in T-Mobile U.S. Inc., the US division of Deutsche Telekom AG.

In July 2014, the France-based company made an offer for the acquisition of a 56.6% stake in T-Mobile. The people close to the situation said that Iliad now seeks to acquire a larger part of the unit and that it still intends to bid about $33 per share. The French company, headed by billionaire entrepreneur Xavier Niel, has set a deadline by the end of this month to reach a preliminary agreement with Deutsche Telekom.

Currently, the German telecommunication company owns a 66% stake in T-Mobile, which is the fourth-biggest wireless carrier in the United States. However, according to two people close to the company, its executives feel that Iliads bid should be sweetened to a minimum of about $35 a share. Earlier this year, Iliads proposition to acquire 56.6% in T-Mobile at $33 per share was rejected by Deutsche Telekom as insufficient.

For its new offer, however, the French low-cost telecom operator is drawing support by newly found financial partners to back its efforts. According to people familiar with the matter, Iliad has negotiated with potential partners, including KKR & Co., and considered raising about $5 billion in additional debt and equity in order to boost its new purchase offer.

A spokeswoman of Iliad refused to comment on the report. Deutsche Telekom and its U.S. unit could not be reached immediately for comment. In a recent interview for CNET, T-Mobile CEO Mr. John Legere said that interest in the carrier was a positive sign. T-Mobile was in prolonged negotiations earlier in the year over the acquisition by SoftBank Corp., which already owns Sprint Corp., at the price of $40 per share. However, talks were abandoned as the deal faced US regulatory disapproval of reducing the number of mobile operators, which could negatively affect pricing of services.

“Anything you hear in the marketplace about T-Mobile is a statement were doing something right, and they believe theres significant value in our company and our brand,” Mr. Legere said.

Iliad SA fell by 1.40% by 11:47 GMT to trade at €161.80 per share in Paris, marking a one year change of -6.04%. The company is valued at €9.53 billion. According to the Financial Times, the 15 analysts offering 12-month price targets for Iliad SA have a median target of €207.00, with a high estimate of €300.00 and a low estimate of €140.00. The median estimate represents a 26.14% increase from the last price of €164.10.