Deutsche Telekom, VoiceStream Deal Is On



One of the worst-kept secrets in recent weeks is finally official: Deutsche Telekom and VoiceStream will merge in a $50.7 billion stock-and-cash deal, according to a posting on the VoiceStream web site.

VoiceStream Wireless Corp., Bellevue, Wash. and Deutsche Telekom entered into a definitive agreement to create "the first wireless operator utilizing the GSM standard worldwide," according to the site.

The equity value will be about $50.7 billion or $197.75 per VoiceStream share based on DT's Euro closing share price last Friday.

Under the the agreement, approved by both boards, VoiceStreamshareholders will receive 3.2 Deutsche Telekom shares and $30 in cash for each share of VoiceStream common stock, subject to adjustments. VoiceStream shareholders can opt for all-stock or an all-cash buyout. A final deal is pending approval of both sets of shareholders. VoiceStream will become part of Deutsche Telekom's mob ile telephony group and continue to use the VoiceStream brand. DT will make a cash investment of $5 billion in VoiceStream in return for preferred stock convertible to common stock aqt $160 a share, according to the site.

Any deal will face scrutiny in the U.S. Congress, where legislators have expressed concern about the 59-percent stake the German government holds in Deutsche Telekom. The deal, however, will reduce the German government's stake to 45 percent due to the number of shares Deutsche Telekom will issue to pay for VoiceStream, sources told Reuters.

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