Sprint Shares Drop Over Worries That Merger With T-Mobile Is Shaky
The merger between T-Mobile and Sprint is currently being fought out in court. Sprint shares are worth 40% less than the value of T-Mobile stocks. The two stocks have generally had a gap in value with T-Mobile being the more valuable stock, but the gap has never been this big.
Court trials are currently going on in New York. A coalition of Attorney Generals from 13 states and Washington, D.C. are leading the case against the merger, claiming that it is anti-competitive in nature.
“The market’s getting more pessimistic,” said Ric Prentiss, an analyst at investment bank Raymond James.
Closing statements are expected to be delivered on Wednesday. Any final decision could be appealed. However, because the merger agreement has lapsed, either T-Mobile or Sprint could now pull out of the deal without facing any repercussions.
It is widely assumed that Sprint needs this merger in order to maintain financial viability. It has lost money in four out the past five fiscal years. Meanwhile, T-Mobile has consistently accrued new customers every quarter.