Sprint (S) stock is cooling off - even as speculation is heating up that the wireless carrier will announce a merger with T-Mobile US (TMUS) in late October - due to concerns the corporate nuptials will prove futile.
There are also some kinks that need to be ironed out including Sprint's valuation, which was at $30 billion when its shares closed last week.
"We remain very bearish on the prospects for deal approval", analyst Matthew Niknam says, trimming the firm's target on Sprint to $7 from $8 (Sprint's down to $7.09 today), and on T-Mobile to $65 from $70 (implying 6.1% upside). Thus, the two carriers are trying to hatch a deal again.
A deal would call for T-Mobile CEO John Legere and his management team to take control of the combined company, according to a person familiar with the deal talks.
A breakup fee isn't likely to be included in the final agreement, the unnamed sources said, reducing the risk for both companies if United States regulators reject the merger. Comcast walked away from that deal a year later after regulators questioned its fairness.
In 2011, AT&T was forced to pay a $4 billion breakup fee to T-Mobile when its takeover attempt of the smaller wireless network failed.
The companies are keen to finalize a deal agreement that can be released alongside quarterly earnings, the dates of which haven't yet been set.
A group of Senate Democrats wants the Justice Department and Federal Communications Commission to start looking into the possible tie-up of Sprint Corp. and T-Mobile US Inc. now, warning that the deal "could raise significant antitrust issues".
In a report by Deadline, the current T-Mobile chief executive will be the man in charge of the assets of both companies.
"Beginning an investigation into a merger of T-Mobile and Sprint now will allow your agencies to quickly, but fully, review the agreement if it is announced", the senators wrote.