A new Bloomberg report states that Deutsche Telekom AG is exploring a mega merger with its U.S. subsidiary, T-Mobile US, in a move that would create a telecom giant valued at roughly $400 billion. If completed, the deal would rank as the largest public M&A transaction ever.

Deutsche Telekom shares fell 4% in Germany on Wednesday morning after Bloomberg reported overnight that the company is in the early stages of considering a combination with T-Mobile US, in which it already holds a 53% stake.

Here’s more color from the outlet:

The potential deal would create a single, simplified corporate group that controls the operations of Deutsche Telekom and T-Mobile and would be jointly owned by the two companies’ current investors. The combined entity may then seek a listing in the US and a major European exchange, though the details are still being worked out, some of the people said.

. . .

Discussions are at a preliminary stage and any transaction would require political support to move ahead, the people said. Details of the possible deal could also change. The companies have considered a closer tie-up on-and-off for years, and there’s no certainty they will decide to proceed this time, the people said.

Commenting on the report, NewStreet Research analysts told clients earlier that a transatlantic group would provide the companies with “more optionality” to pursue potentially large acquisitions without diluting Deutsche Telekom.

“For that alone, we think this is a highly worthwhile deal for DT to consider, as it would give DT more future options in a consolidating marketplace where convergence could take any form over the next 5 to 10 years,” NewStreet Research analysts said, adding that they believe a deal would likely be a “nil-premium merger.”

Citigroup analysts are more skeptical: They do not see immediate benefits for T-Mobile shareholders unless Deutsche Telekom offers a meaningful premium.

“The possibility of a merger scenario also raises the question as to whether or not DT would be willing to pay a significant premium to consolidate ownership, especially since DT could argue its non-US operations are already undervalued within the DT share price,” Citigroup analysts noted.

If successful, the M&A deal would eclipse the $203 billion Vodafone-Mannesmann merger in 1999, which remains the largest merger on record, according to LSEG data.

Deutsche Telekom currently has a market value of about $159 billion, while T-Mobile is valued at roughly $215 billion.