T-Mobile USA parent Deutsche Telekom strongly defended its merger of T-Mobile with MetroPCS (NYSE:PCS) after a minority MetroPCS shareholder sent a letter to the company's board urging it to reconsider the deal.
The back-and-forth was triggered when P. Schoenfeld Asset Management disclosed that it sent a letter to MetroPCS' board Jan. 30 announcing its opposition to the planned transaction, arguing that it undervalues MetroPCS and would load it down with debt that would be "unsustainable" for a company of its size and credit rating.
"We are presently of the view that it would be better for PCS to remain a stand-alone company while examining opportunities to consummate alternative transactions, than to accept the package of cash and securities being offered to PCS stockholders," the letter states.
Pushing back, DT said it "remains committed" to the deal and that it will "enforce its rights under the definitive agreement with MetroPCS."
"This combination will substantially benefit the shareholders and customers of both companies by creating a new company that will be the leading wireless value carrier with expanded scale, spectrum and financial resources to compete across the entire U.S. market," DT said in a statement.
Under the terms of the deal, MetroPCS will engage in a reverse-merger with T-Mobile, and Deutsche Telekom will own 74 percent the combined company, which will be public. MetroPCS will also declare a 1-for-2 reverse stock split and pay $1.5 billion in cash to its shareholders.
Schoenfeld, which held around 2 percent of MetroPCS in October, said that MetroPCS shareholders should get 37 percent of the new company rather than 26 percent. MetroPCS said it still recommends the T-Mobile deal but that it will "carefully review and consider" the letter, according to Reuters.
DT and MetroPCS expect the deal to close by the middle of the year; regulators still need to approve it in addition to MetroPCS shareholders. The deal will boost T-Mobile's spectrum reserves, especially in the 1700 MHz AWS band, allowing it to deploy 2x20 MHz channels for LTE in many markets.
- see this Mobile World Live article
- see this Reuters article
- see this Dow Jones Newswires article
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