(Reuters) – T-Mobile US Inc. (TMUS.O) and Sprint Corp (SN) are laying the foundation for special committees of their board of directors to decide on the merger of the third and fourth largest wireless operators in the US, according to people familiar with this issue.
These council committees are important for the merger, as T-Mobile and Sprint belong to the majority of Deutsche Telekom AG (DTEGn.DE) and the Japanese SoftBank Group Corp (9984.T) owned by Germany and can be left vulnerable to potential lawsuits of minority shareholders if they do not create independent mechanisms to deal with the transaction.
Both T-Mobile and Sprint formed committees that include independent directors to decide whether to conclude a deal after the merger agreement is completed, which is currently expected in the next three weeks, are reported sources.
In addition, committees of special councils of companies also hired financial advisers to help them express their views on justice, sources added.
Like many mergers, T-Mobile and Sprint decided that there is no need to give their minority shareholders the right to vote on the deal, sources say.
An alternative would be to have the merger approved by the majority of their minority shareholders. However, company advisors have determined that this is not legally necessary and could jeopardize the deal with minority shareholders to organize against it, according to sources.
Some minority shareholders of T-Mobile believe that Sprint should not offer any premium for its shares, sources say. Nevertheless, T-Mobile and Sprint have previously agreed on a range for the stock ratio, which, even at its low level, will offer Sprint a modest premium to where its shares are currently traded, sources added.
This may lead to Softbank and other Sprint shareholders holding about 40 percent of the combined company based on where the shares are currently traded, sources added. The exact exchange ratio will be determined by examining the average share price of the company over the past few months, one source added.