TMUS Stock Gives Up Gains To Close Lower After Report of Potential Historic Tie-Up With Parent Deutsche Telekom

• Under the contemplated deal, a corporate group would control the operations of Deutsche Telekom and T-Mobile.
• The combined entity may then seek to list on both U.S. and European exchanges, the report added. 
• According to Bloomberg sources, the discussions are at a preliminary stage and details are still being worked out with chances that the details of the potential deal change.

Shares of T-Mobile US Inc. (TMUS) rose as much as 3% before pulling back on Tuesday after a Bloomberg report that Deutsche Telekom AG is considering a full combination with its American subsidiary.

Bloomberg reported, citing people familiar with the matter, that the German carrier — which owns roughly 53% of T-Mobile — is weighing the creation of a new holding company that would make a stock bid for shares of both Deutsche Telekom and T-Mobile US.

Under the contemplated deal, a corporate group would control the operations of Deutsche Telekom and T-Mobile. The group would be jointly owned by the two companies’ current investors and the combination would create the world’s largest wireless operator by market cap, exceeding China Mobile, the report said.

The combined entity may then seek to list on both U.S. and European exchanges, the report added.

According to Bloomberg sources, the discussions are at a preliminary stage and details are still being worked out with chances that the details of the potential deal change. A deal would require political support, the report said, noting that the companies may need to consider commitments to keep a major base in Germany and make significant investments in the US to win approval.

Deutsche Telekom and T-Mobile have considered a closer tie-up on-and-off for years, Bloomberg noted.

How Did Retail Traders React?

On Stocktwits, retail sentiment around TMUS stock stayed within the ‘bullish’ territory while message volume  stayed at ‘high’ levels.

A Stocktwits user recommended buying the shares of TMUS below $200 before it explodes to new highs.

According to data from Koyfin, 24 of the 29 analysts covering TMUS rate it ‘Buy’ or higher while five rate it ‘Hold.’ The average 12-month price target on the stock is $268.35, representing a potential upside of about 37%.

TMUS stock has fallen 23% over the past 12 months. 

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