What’s going on?

Deutsche Telekom (German telecoms) agreed to increase its stake in T-Mobile US (American wireless network operator) by 5% through SoftBank (Japanese tech conglomerate), bringing the total ownership to almost 50%.

What does this mean?

• In return, SoftBank would receive 4.5% of Deutsche’s shares.
• Deutsche also seems serious about increasing in T-Mobile US to more than 50%, which would give it the majority control. That might be the next stage in Deutsche’s master plan of conquering the US; it just agreed to sell its Dutch business to keep funding its adventures in America.

Why should I care?

The bigger picture: Mixed feeling

• Investors were pretty indifferent about the announcement, probably waiting to see how the relationship with the US market would actually work out.
• On the other hand, investors were happy enough with SoftBank’s side to send its shares up 10%, which is Softbank’s biggest jump since 2020 December. SoftBank has a habit of buying back its own shares and pushing up their price, and that might be exactly what investors is expecting Softbank to do from the proceeds.

Zooming out: IB as duck in water

• There’s been a boom in M&A deals for 2021, which has had a lot to do with the record-low interest rates and record-high stock prices.
• That boom doesn’t seem to fade out in Europe anytime soon, with its companies currently sitting on $3.8 trillion in cash (their biggest hoard on record) and that’s begging to be spent on M&A.

Content source: Finimize (2021) Hold, Please. Available at: https://www.finimize.com/wp/news/hold-please/ [Accessed on Sep 8, 2021]