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* Deal brings German group closer to U.S. majority
* Japan's Softbank secures minority stake in D.Telekom
* D.Telekom reinvests proceeds of Dutch sale in T-Mobile US
* Deals follow T-Mobile takeover of Sprint last year
(Writes through with executive quotes, shares, swap details)
By Douglas Busvine and Tim Kelly
BERLIN/TOKYO, Sept 7 (Reuters) - Deutsche Telekom
has struck a share-swap deal with Softbank Group to
increase its stake in U.S. unit T-Mobile and sold its
Dutch unit in a major restructuring that strengthens the German
group's transatlantic focus.
As a result of the two deals announced on Tuesday, Deutsche
Telekom will raise its stake in T-Mobile US by 5.3% to 48.4%,
bringing CEO Tim Hoettges closer to his goal of securing direct
control over the $170 billion U.S. telecoms operator.
Softbank will in return receive cash and a 4.5% stake in
Deutsche Telekom, establishing a direct shareholding
relationship after the Japanese group sold its U.S. Sprint unit
to T-Mobile in a deal that closed in early 2020.
The latest transactions seek to lock down that deal by
bringing Deutsche Telekom within touching distance of majority
ownership over T-Mobile US - which accounts for three-fifths of
group sales and is its most profitable unit.
For Softbank founder Masayoshi Son, the share swap deal
substitutes a residual stake in the U.S. business for a
strategic holding in Deutsche Telekom, which is also present in
a dozen European countries.
"This is a very attractive transaction for Deutsche Telekom
and its shareholders to further benefit from the value creation
potential in T-Mobile US and beyond," Hoettges said.
"But we are not just increasing our stake in T-Mobile US –
we are welcoming SoftBank as a new key investor and strategic
partner for Deutsche Telekom."
Softbank's Marcel Claure said: "This is a landmark
transaction that is a true win-win-win for our portfolio
companies, SoftBank and Deutsche Telekom."
Shares in Softbank, which is the world's biggest tech
investor through its Vision Fund portfolio, rallied by 10% on
the news in Tokyo, while Deutsche Telekom was up 2.4% in
pre-market trading in Frankfurt.
DUTCH EXIT
Separately, Deutsche Telekom sold its Dutch unit T-Mobile
Netherlands to a consortium of private equity houses Apax and
Warburg Pincus for 5.1 billion euros ($6.1 billion).
Deutsche Telekom acquired control of the Dutch business from
Sweden's Tele2 in 2018 but never considered the unit,
which ranked a distant third behind KPN and Vodafone
Ziggo, as a core asset.
Deutsche Telekom will invest some of its 3.8 billion euros
in proceeds from the Dutch deal to raise its stake in T-Mobile
US. Sweden's Tele2, which had retained a 25% stake in
T-Mobile Netherlands, also sold out.
Following the Sprint deal, Deutsche Telekom had under a
shareholder agreement held the right to the votes associated
with Softbank's residual stake in T-Mobile US. It had also
struck option deals with Softbank locking in the right to raise
its stake in T-Mobile US.
Still, with Deutsche Telekom carrying a debt load of nearly
130 billion euros, the extent of its existing leverage meant it
was always going to be hard to pay cash to gain majority control
over T-Mobile US.
Under the share swap deal, Deutsche Telekom will issue 225
million new shares valued at 20 euros - 12% above their current
market price - to Softbank.
In return, Softbank will sell around 45 million T-Mobile US
shares to Deutsche Telekom at an average price of $118 per
share. That compares to last week's closing price for T-Mobile
US of $136.
In addition, Deutsche Telekom will buy around 20 million
shares in T-Mobile US from Softbank with the proceeds from the
Dutch sale - adding to the cash windfall for the Japanese
investor.
Goldman Sachs and Morgan Stanley acted as financial advisers
to Deutsche Telekom on the transaction. Cravath, Swaine & Moore
LLP and Freshfields Bruckhaus Deringer acted as legal advisers.
($1 = 0.8425 euros)
(Additional reportig by Toby Sterling in Amsterdam, Simon
Johnson in Stockholm and Ritsuko Ando in Tokyo
Editing by Kim Coghill and Mark Potter)
