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Sprint, T-Mobile set to announce a $26 billion merger, with John Legere at the helm

T-Mobile is closing in on a deal to merge with Sprint that will value Sprint just above its current market price of $6.50 per share, people familiar with the matter told CNBC, and will likely place T-Mobile’s chief in the top job.

John Legere will run the combined company, which will have dual headquarters in Bellevue, Washington and Kansas City, according to one of the people. Some Sprint executives are expected to remain with the company even after a deal is announced, the person said.

The $26 billion all-stock deal could be announced as soon as Sunday, said the people, who asked not to be named because the negotiations are private. No deal has been signed and talks could still fall apart, the people said.

SoftBank, which owns about 85 percent of Sprint, will allow Deutsche Telekom, which owns almost two-thirds of T-Mobile, to consolidate the new company’s earnings, said the people. There is no breakup fee associated with the deal, they said.

A deal, if reached, would conclude several years of negotiations between the companies. Talks most recently broke off late last year after SoftBank CEO Masayoshi Son decided he didn’t want to lose control of a combined company. Deutsche Telekom will own more than 40 percent of the new company, with SoftBank’s ownership just below 30 percent.

Several things changed over the last few months that led Son to change his mind, including greater synergies from lower corporate taxes, an increased understanding of how much 5G deployment will cost Sprint, and a rapidly changing competitive wireless landscape that now includes cable providers, the people said.

Last week, Comcast and Charter, the two largest U.S. cable companies, announced an extended partnership agreement that will allow each company to develop products and services.

Still, the most important change may have been the settling of Sprint and T-Mobile share prices after months of deal speculation last year inflated both stocks, two of the people said. The approximately $6.50-per-share price for Sprint is lower than what Sprint nearly accepted last year, one of the people said.

A deal announcement doesn’t mean a merger will actually happen. Combining the third- and fourth-largest wireless U.S. providers in a market with only four participants — Verizon, AT&T, T-Mobile and Sprint — could be a hard sell for U.S. regulators. AT&T attempted to buy T-Mobile in 2011, only to have regulators block it on anti-competitive grounds.

Disclosure: Comcast is the owner of NBCUniversal, the parent of CNBC.

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