T-Mobile, Sprint ready board committees to decide on merger: sources

(Reuters) – T-Mobile US Inc and Sprint Corp are laying the groundwork for special committees of their board of directors to decide on a merger between the third and fourth largest U.S. wireless carriers, according to people familiar with the matter.

FILE PHOTO: Smartphones with the logos of T-Mobile and Sprint are seen in this illustration taken September 19, 2017. REUTERS/Dado Ruvic/Illustration/File Photo

These board committees are important for the merger because T-Mobile and Sprint are majority owned by Germany’s Deutsche Telekom AG and Japan’s SoftBank Group Corp respectively, and could be left vulnerable to potential lawsuits from minority shareholders if they don’t establish independent mechanisms to review the deal.

Both T-Mobile and Sprint have formed committees comprising independent board directors to decide on whether the deal should be signed once the merger agreement has been finalized, which is currently expected in the next three weeks, the sources said.

The companies’ special board committees have also hired financial advisers to help them deliver fairness opinions, the sources added.

As with many all-stock mergers, T-Mobile and Sprint have decided there is no need to give their minority shareholders a vote on the deal, the sources said.

An alternative would have been to make the merger subject to approval by a majority of their minority shareholders. However, the companies’ advisers have determined this is not legally necessary, and could even jeopardize the deal were minority shareholders to organize against it, according to the sources.

Some T-Mobile minority shareholders believe Sprint should not be offered any premium for its shares, the sources said. However, T-Mobile and Sprint have tentatively agreed on a range for a stock exchange ratio which, even at its low end, would offer Sprint a modest premium to where its shares are trading currently, the sources added.

This could result in SoftBank and other Sprint shareholders holding close to 40 percent of the combined company based on where the shares are currently trading, the sources added. The exact share exchange ratio will be determined by looking at the volume-weighted average stock price of the companies over the last few months, one of the sources added.

T-Mobile’s and Sprint’s due diligence on each other is almost complete, and much of their focus now is on working out a business plan for the combined company, as well as an integration strategy, according to the sources.

Sprint and T-Mobile declined to comment, while Deutsche Telekom and SoftBank did not immediately respond to requests for comment. The sources asked not to be identified because the negotiations are confidential.

Reporting by Liana B. Baker in New York; Editing by Muralikumar Anantharaman

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Brazilian fintech Nubank offers accounts for transfers, payments

SAO PAULO (Reuters) – Brazilian startup Nubank said on Tuesday it would expand from credit cards into digital accounts allowing users to make transfers, pay bills and earn more interest than average savings account, beefing up its challenge to traditional banks.

As the biggest new technology company breaking into Brazil’s banking sector, Nubank has boasted since 2014 of its simple digital interface, low interest rates and lack of tricky fees for its popular purple credit card.

Yet only 2.5 million Brazilians have opened a Nubank card of more than 13 million who applied, due to strict credit checks — an obstacle the company is lifting for the new accounts.

“Our real revolution begins today,” founder and Chief Executive David Velez told an audience at Nubank’s Sao Paulo headquarters, pacing the stage in jeans and a black T-shirt. “Now we are offering services to 100 percent of Brazilians.”

Tech-savvy millennials have been the core demographic for Nubank’s credit card, but Velez said he hoped new accounts would serve some of the roughly 60 million Brazilians – around 30 percent of the population – who do not have a bank account.

Registered as a “payment institution” under new rules defined by Brazil’s central bank, Nubank will invest clients’ money directly in public debt and offer them 99 percent of the interest, charging a small fee for its services.

“We’re not trying to make money with these accounts, but we’re also not trying to lose money,” Velez told journalists, adding that the company’s investors were happy to see him reinvest in growth rather than turn a net profit.

Venture capital firms including Sequoia Capital, Kaszek Ventures, Tiger Global Management and DST Global have invested $ 179 million in Nubank since 2013, giving it a value of $ 500 million in early 2016 that made it the largest Brazilian fintech startup.

The number of firms in Brazil’s financial technology sector has risen about six-fold in the past couple of years as they offer borrowers lower interest rates than traditional banks.

Nubank’s two-year-old application to register with the central bank as a “financial institution” has made progress and is entering the “final stretch,” said Cristina Junqueira, co-founder and vice-president of business development at Nubank.

Velez said the company could eventually offer debit cards linked to the new accounts and let users withdraw cash at ATMs.

“We’re really looking to China as a country that shows the future of money — much more than the United States or Europe,” he said, referring to Chinese institutions that use digital payment systems rather than traditional methods like checkbooks.

Reporting by Brad Haynes; Editing by Andrew Hay

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