The Winners and Losers From T-Mobile and Sprint’s Merger Saga

Voting in New Hampshire’s Democratic primary has begun , and Mike Bloomberg has won over one small town . Meanwhile, Pete Buttigieg is ...

Voting in New Hampshire’s Democratic primary has begun, and Mike Bloomberg has won over one small town. Meanwhile, Pete Buttigieg is gaining support from business moguls. (Want this in your inbox each morning? Sign up here.)

A federal judge is expected to approve T-Mobile’s $26 billion takeover of Sprint, perhaps even today, bringing a yearslong merger campaign to an end.

The winners:

SoftBank, which pumped billions of dollars into Sprint over nearly a decade. The T-Mobile deal turned out to be its best hope of rescuing an expensive bad bet.

Bankers from nearly a dozen firms working on the transaction. Deep breath: PJT Partners, Deutsche Bank, Evercore, Goldman Sachs and Morgan Stanley for T-Mobile; Raine, Centerview, Citigroup and JPMorgan Chase for Sprint; and Mizuho and SMBC Nikko for SoftBank. They could split fees of at least $155 million, according to the consultancy Freeman & Company.

Makan Delrahim, the Justice Department’s antitrust chief, who helped save the deal from regulatory limbo — then complained about states’ efforts to unwind his work.

The losers:

State attorneys general, who sought to block the deal despite its approval by the Trump administration, including those of California and New York. They argued that it would lead to a loss of competition and higher prices for consumers.

The great unknown:

Consumers, who may not feel the effects of the deal for years, for good or bad.

The White House’s $4.8 trillion budget proposal features “a familiar list of deep cuts to student loan assistance, affordable housing efforts, food stamps and Medicaid,” the NYT reports. It lifts spending on defense and the border wall, and extends individual tax cuts set to expire in 2025.

It won’t happen. Or, at least, it’s unlikely to be approved by Congress in its entirety. Instead, the budget largely serves to signal the administration’s priorities ahead of its re-election campaign.

It relies on rosy economic assumptions to make the numbers work, with punchy forecasts for G.D.P. growth and government borrowing costs leading to a steady reduction in the deficit and, eventually, a balanced budget by 2035. It’s common practice, of course, for administrations to publish overly optimistic forecasts alongside its policy proposals.

On the financial front, the budget cuts support for student-loan relief programs and reduces funding for the Consumer Financial Protection Bureau. There’s a small increase for the Treasury Department’s Financial Crimes Enforcement Network, intended to help combat “emerging virtual currency and cybercrime threats.”

The fine print: Politico runs down the quirkier aspects of the budget, including the reveal of a new paint job for Air Force One, flagged by the president with much fanfare over the summer.

The tech giant isn’t letting up in its legal battle over the Pentagon’s cloud-computing contract, which the Trump administration awarded to Microsoft last year. Amazon wants President Trump and Defense Secretary Mark Esper to give depositions, reports Karen Weise of the NYT.

A recap: Amazon has argued that Mr. Trump let personal animus against its founder Jeff Bezos — driven largely by coverage from the WaPo, which Mr. Bezos owns — affect an important decision for American national security.

Amazon cited tweets and other public comments by Mr. Trump in its court filing seeking to depose the president. What it doesn’t do is provide direct evidence that Mr. Trump directed Mr. Esper to blackball Amazon.

Both Microsoft and the Pentagon oppose the deposition request. The Defense Department called it “unnecessary, burdensome and merely seeks to delay getting this important technology into the hands of our warfighters.”

Reality check: Courts don’t automatically grant these kinds of requests, the WSJ notes — and deposing cabinet-level officials is relatively rare.

Shares in Slack jumped yesterday after Business Insider reported that IBM would use the workplace messaging app for all its employees — and then promptly gave up the gains after Slack clarified what the deal meant.

Here’s what happened:

• The big news was that all of IBM’s 350,000 employees would use the messaging app, a victory for Slack over rivals like Microsoft’s Teams service.

• Business Insider erroneously reported that the deal would make IBM Slack’s biggest customer, sending the messaging company’s shares up as much as 15 percent.

• Some investors even speculated that IBM would try to buy Slack outright.

• Slack then published a regulatory filing clarifying that IBM was already its biggest customer, and that the new deal wouldn’t meaningfully change its financial guidance.

Shares in Slack fell 7 percent in after-hours trading.

If you thought relations between Washington and Beijing had thawed after the recent trade deal breakthrough, think again.

Federal prosecutors yesterday charged four Chinese military officers with hacking into Equifax in 2017, stealing trade secrets and the personal data of 145 million Americans. It was only the second time that the Justice Department had indicted the Chinese military on suspicions of hacking.

The charges show that the Trump administration remains worried about a Chinese threat to U.S. national security:

• Attorney General Bill Barr said yesterday that China could use the stolen personal information and combine it with A.I. to target American officials.

• He pointed to previous cyberattacks that he said had been orchestrated by Beijing, including those affecting the health insurer Anthem and the hotel chain Marriott.

• Last week, Mr. Barr suggested that the U.S. government finance takeovers of European telecoms to counter the rise of the Chinese tech firm Huawei.

Expect the Trump administration to keep up the carrot-and-stick approach with Beijing as it negotiates the second phase of a trade deal.

The direct-to-consumer retailer said yesterday that it was shutting down, a first for a portfolio company in SoftBank’s $100 billion Vision Fund. But it’s not exactly a huge disaster for Masa Son’s tech conglomerate.

SoftBank had invested $100 million in Brandless, which sold inexpensive household and food items, such as “dog shampoo and conditioner,” for $3 each. Last year, SoftBank executives reportedly pushed the company to turn a profit. (Imagine that.)

Brandless blamed a “fiercely competitive” retail market for its collapse. But it had also gone through a carousel of management changes and tried raising prices for some products. And it had tried pivoting to trendier things like CBD oil.

It’s the latest bit of bad news for SoftBank, after other Vision Fund portfolio companies — like the robot pizza company Zume — announced layoffs. News reports have also suggested that it was struggling to raise money for a second Vision Fund.

Andrew’s take: The headlines suggest that Brandless is another example of trouble for SoftBank. In truth, Brandless is basically lint in Vision Fund’s wallet pocket.

More trouble in direct-to-consumer start-up land: Edgewell abandoned its $1.4 billion deal to buy shaving company Harry’s, which has promised to sue. Get the popcorn out.


• Xerox raised its hostile takeover bid for HP to about $35 billion and plans to take its offer directly to the computer maker’s shareholders. (Reuters)

• Simon Property Group agreed to buy 80 percent of Taubman Centers in a deal that values the mall operator at $3.6 billion. (CNBC)

• The Agnelli family of Italy reportedly plans to use the cash it will receive from the sale of its PartnerRe insurance business to buy more companies. (Reuters)

Politics and policy

• The investor Tom Barrack, an ally of President Trump, says that a Democratic candidate could win in November — and cited Joe Biden and Mike Bloomberg as major rivals. (CNBC)

• A bill in the House would make plastic container companies pay for the collection of plastic waste, though it has little hope of becoming law. (NYT)


• A California judge refused to temporarily block a new state law that tightens legal protections for gig-economy workers like Uber drivers. (NYT)

• Mobile World Congress, which is held in Barcelona, and is the world’s biggest smartphone trade show, will look a lot emptier this year because of the coronavirus outbreak. (FT)

Best of the rest

• Meet the former reality TV producer who has become a top adviser to Saudi Arabia’s $300 billion sovereign wealth fund. (WSJ)

• Bill and Melinda Gates said their foundation’s focus this year would be on climate change and gender equality. (Fortune)

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Newsrust: The Winners and Losers From T-Mobile and Sprint’s Merger Saga
The Winners and Losers From T-Mobile and Sprint’s Merger Saga
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