T-Mobile US (NASDAQ: TMUS) announced that it has entered into a definitive agreement to acquire Ka’ena Corporation and its prepaid brands, Mint Mobile and Ultra Mobile, along with wireless wholesaler Plum. Mint and Ultra are already MVNOs on T-Mobile’s network. Both brands will complement the company’s other prepaid offerings including Metro by T-Mobile, T-Mobile’s own branded prepaid service, and its Connect by T-Mobile brand.
Under the terms of the agreement, T-Mobile will pay up to a maximum of $1.35 billion in a combination of 39 percent cash and 61 percent stock to acquire Ka’ena. The actual price to be paid by T-Mobile will be based upon Ka’ena’s performance during certain periods before and after the closing. The transaction is expected to close later this year.
Once the deal is closed, T-Mobile plans to leverage its supplier relationships and distribution scale to help both brands to grow by offering consumers competitive prices and greater device choices.
Neither T-Mobile nor Ka’ena Corporation are disclosing the number of subscribers that T-Mobile will gain as part of this acquisition because the Mint and Ultra brands are private companies. Subscriber counts will be revealed at the end of the year after the deal closes, CNET reported.
Following the deal’s close, Mint’s founders David Glickman and Rizwan Kassim will remain with T-Mobile to manage the brands under a separate business unit. Mint Mobile co-owner, Canadian actor Ryan Reynolds will continue promoting the Mint Mobile brand.
“Mint has built an incredibly successful digital direct-to-consumer business that continues to deliver for customers on the Un-carrier’s leading 5G network and now we are excited to use our scale and owners’ economics to help supercharge it – and Ultra Mobile – into the future,” said T-Mobile CEO Mike Sievert.
“Our brands have thrived on the T-Mobile network, and we are thrilled that this agreement will take them even further, bringing the many benefits of 5G to even more Americans,” said David Glickman, founder and CEO of Mint, Ultra and Plum.
Though not expected to affect the company’s 2023 guidance or its ongoing stock repurchase program, T-Mobile anticipates the long-term value of Ka’ena’s business will be slightly accretive to both Core Adjusted EBITDA and Free Cash Flow.
Cleary Gottlieb Steen & Hamilton LLP served as legal advisor to T-Mobile. LionTree LLC served as lead financial advisor. BofA Securities and TAP Securities LLC also were financial advisors to Ka’ena Corporation. Latham & Watkins LLP served as lead legal counsel and advisor, with Bernstein Shur also serving as legal counsel for Ka’ena Corporation.
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