Deutsche Telekom, VoiceStream Boards Approve $50.5 Billion Cash, Stock Bid
The boards of both Deutsche Telekom AG and VoiceStream Wireless Corp. yesterday approved the German company's $50.5 billion stock-and-cash bid for the U.S. wireless concern, according to people familiar with the matter.</br></br>The proposed transaction, which also requires Deutsche Telekom to assume $5 billion of VoiceStream debt, would bring the booming wireless industry a step closer to seamless world-wide usage of cellular phones. The new company would have licenses to operate wireless networks that stretch from some of Europe's hottest markets to fast-growing U.S. wireless markets such as New York and California. The deal also forges the first wireless competitor that operates in both Europe and North America using a common digital standard called Global System for Mobile Communications -- paving the way for cell-phone customers to more easily use one phone all over the world.</br></br>VoiceStream's major shareholders -- including Hutchison Whampoa Ltd. and Sonera Ltd. -- have also agreed to vote for the deal. In total, holders representing more than 50% of the shares outstanding are already in favor of the deal, according to a person familiar with the matter. Hutchison, which purchased its 23% stake starting in 1997 for $1.2 billion, stands to reap $11.6 billion. John Stanton, VoiceStream's chief executive, who owns six million shares, stands to reap about $1.1 billion.</br></br>But the proposed deal faces growing opposition in Washington toward a foreign-government-backed telecommunications company owning a U.S. telecom concern. A bill introduced by Sen. Ernest Hollings (D., S.C.), seeks to block Deutsche Telekom from buying a U.S. phone company as long as the German government holds more than 25% of the company.</br></br>Should the VoiceStream deal be completed, the German government's stake in the company would be diluted to 45% from 58%. Deutsche Telekom hopes this will help appease concerns in Washington. Meanwhile, some Europeans see the Hollings initiative as a sign of U.S. protectionism. In recent days, European Union diplomats have said a U.S. move to block Deutsche Telekom from purchasing VoiceStream based on foreign-government holding could threaten existing trade agreements. German officials said they would almost certainly file a complaint with the World Trade Organization. The transaction would also be subject to approval from the Federal Communications Commission.