UPDATE 2-Sprint close to agreement on terms to buy T-Mobile -report

Wed Jun 4, 2014 7:10pm EDT

(Adds antitrust expert's comment, Sprint's no-comment)

June 4 (Reuters) - Sprint Corp is closing in on an agreement to pay $40 a share to buy T-Mobile US Inc, Bloomberg reported on Wednesday, drawing the two companies toward a deal to combine the country's third- and fourth-largest telecoms carriers.

The price reportedly under discussion represents about a 17 percent premium to T-Mobile's Wednesday close and values the No. 4 carrier at more than $32 billion.

Under a proposed agreement, Sprint would offer about 50 percent stock and 50 percent cash for T-Mobile, leaving parent Deutsche Telekom AG with about a 15 percent stake in the combined company, Bloomberg cited people with knowledge of the matter as saying.

A deal could be announced as soon as July, Bloomberg said.

Softbank Corp owns Sprint, while Deutsche Telekom owns 67 percent of T-Mobile.

Softbank Chairman Masayoshi Son has long been eager to buy T-Mobile and merge it with Sprint, creating a carrier with the resources to upgrade its network and better compete with market leaders AT&T Inc and Verizon Wireless.

An exit from the United States would allow Deutsche Telekom to beef up its operations across Eastern Europe.

But the U.S. Federal Communications Commission and Justice Department have raised concerns about such a tie-up, revolving around the risk that it could raise prices for consumers. U.S. regulators rejected AT&T's $39 billion takeover bid for T-Mobile US in 2011.

Sprint declined comment. T-Mobile did not respond to requests for comment. Softbank and Deutsche Telekom were not immediately available for comment.

"The agencies have tipped their hand and the parties know that," said an antitrust expert who spoke anonymously to protect business relationships.

They "must think that they have stronger arguments and they're willing to battle them out with the agencies. That has to be part of their calculus here." (Reporting by Diane Bartz in Washington, Marina Lopes in New York, and the San Francisco newsroom; Editing by Steve Orlofsky)

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