Atlantic China Welding Consumables, Inc. Telecom consolidation outlook clouded! Deutsche Telekom (DTEGY.US) reportedly pauses merger plan with T-Mobile US (TMUS.US)

Deutsche Telekom (DTEGY.US)'s plan to merge with T-Mobile US (TMUS.US) has hit a roadblock, casting a shadow over what was expected to be the largest merger of publicly listed companies in history, according to people familiar with the matter. The German telecom giant has decided not to submit a formal acquisition offer for now, the people said. The decision was partly due to opposition from Deutsche Telekom's works council, the body representing employees. Labor representativesincluding works council and union delegateshold half the seats on German companies' supervisory boards and therefore have a significant say in strategic decisions. Still, Deutsche Telekom may yet decide to move forward and make an offer in the future, the people added. T-Mobile US shares have fallen nearly 30% this year and the company now has a market value of about US$157 billion. Deutsche Telekom is T-Mobile US's largest shareholder with a stake of more than 50%. Deutsche Telekom has a market value of about EUR124 billion (about US$138 billion). Deutsche Telekom and T-Mobile US share a long history. In 2001, Deutsche Telekom acquired VoiceStream Wireless for US$56 billion, entering the U.S. market and renaming the company T-Mobile US, adopting the brand name used by its international operations. Deutsche Telekom later took T-Mobile US public in 2013 through a reverse merger with smaller U.S. telecom company MetroPCS. T-Mobile US has since grown into the second-largest wireless carrier in the U.S., with a market value exceeding Deutsche Telekom's and contributing most of Deutsche Telekom's profit. Reports in April this year indicated that Deutsche Telekom was planning a merger with T-Mobile US. The reports said at the time that Deutsche Telekom was in preliminary talks to set up a holding company that would acquire shares in both companies through a stock tender offer. If completed, the deal would create the world's largest telecom company. The plan had already faced resistance, however. Activist investor Elliott Investment Management has built a sizable stake in Deutsche Telekom and urged the company to abandon the merger plan. In addition, the previously proposed merger structure would dilute the German government's stake and could also move the group's holding company out of Germany. That would be highly politically sensitive for Germany, Europe's largest economy. Security concerns about nationally critical infrastructure run deep in Germany. Deutsche Telekom must win the German government's support while also dealing with U.S. regulatory scrutiny and potential requirements related to foreign ownership and investment commitments.