Ten state attorneys general are suing to block the planned merger of Sprint and T-Mobile, according to reports from Reuters and the Wall Street Journal.
New York Attorney General Letitia James is leading the effort, according to Reuters. James is scheduled to hold a press conference on Tuesday at 2 p.m.
A multi-state lawsuit to halt the $26 billion deal is a major blow for the merger, according to Blair Levin, an analyst with New Street Research. "[A]t this moment, no one should have a high level of confidence in the deal moving forward," he said in a research note. The states "have a relatively straightforward case with significant antitrust precedent on their side."
Shares of both companies fell sharply on the news, with Sprint losing 7% and T-Mobile dropping nearly 2%.
The two telecommunications companies announced their proposed union, after a merger attempt during the Obama administration fell through. The deal would reduce the number of major wireless carriers in the U.S. to three, a level of industry consolidation that critics say would harm consumers.
Federal Communications Commission Chairman Ajit Pai has said he supports the deal. However, staff in the Department of Justice's antitrust division have recommended that the agency block it.