30 Senators Oppose Possible Bid for Sprint
A bipartisan group of U.S. senators indicated that they opposed Deutsche Telekom’s possible bid for Sprint Corp., in light of a law that prohibits foreign companies that are partially government-owned from buying American companies.
Thirty senators, including Majority Leader Trent Lott (R-Miss.) and Minority Leader Tom Daschle (D-S.D.), urged federal regulators to closely examine any proposed merger that may result from reported informal talks between the two companies.
“As the U.S. law provides, we oppose the transfer of licenses to companies who are more than 25% foreign government-owned,” the senators said in a June 29 letter sent to Federal Communications Commission Chairman William Kennard.
The lawmakers said an acquisition by a government-owned telecommunications firm would be inconsistent with U.S. policy to promote competition and maintain a secure communications system for U.S. national security.
A spokeswoman for the FCC said in response that the agency “will carefully scrutinize any transaction that comes our way.”
Deutsche Telekom, which already holds a 10% stake in Sprint, is 66% owned by the German government.
The German telecommunications giant and Sprint were reported on Monday to have held preliminary merger talks following opposition from the United States and Europe last week to a planned $120-billion bid by WorldCom Inc. for Sprint.
The proposed acquisition of Sprint, the No. 3 U.S. long-distance carrier, by WorldCom, the No. 2 carrier, ground to a halt after the companies were unable to reach a compromise with U.S. antitrust regulators and the European Commission voted against the merger plan.
Spokesmen for both Sprint and Deutsche Telekom declined to comment on the informal talks reported in Britain’s Financial Times.
Shares of Kansas City, Mo.-based Sprint closed up $3.44 at $54.44 on the New York Stock Exchange based on the acquisition speculation, and American depositary receipts for Deutsche Telekom closed off 94 cents at $55.81 during a pre-holiday, shortened trading session on the NYSE.
An industry source said that although the two sides were in contact, speculation the two sides have held preliminary merger talks was “wildly overdone.”
