MetroPCS defends T-Mobile USA deal, FCC approves it

Tue Mar 12, 2013 4:23pm EDT
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NEW YORK (Reuters) - MetroPCS Communications Inc fought back against shareholder criticism of its proposed merger with T-Mobile USA on Tuesday, the same day that the U.S. Federal Communications Commission approved the deal.

A shareholder vote on April 12 on the merger is one of the last remaining obstacles to the deal. While analysts had widely expected regulatory approval for the deal the outcome from the shareholder meeting has been more difficult to predict.

Two big shareholders have publicly criticized the merger of MetroPCS and the Deutsche Telekom unit, announced in October, due to its valuation of MetroPCS and the proposed $21 billion debt level of the combined company.

P. Schoenfeld Asset Management, which had a 1.66 percent stake in MetroPCS on December 31, is leading a proxy battle against the merger. It has gained support from the company's top shareholder, Paulson & Co, which owns 9.9 percent of MetroPCS stock.

But MetroPCS said in its letter that the combined company's debt leverage would be in line with those of its peers and its own historical average.

Under the deal, Deutsche Telekom would end up with a 74 percent stake in the combined company, and MetroPCS would declare a 1-for-2 reverse stock split and pay $1.5 billion in cash to its shareholders.

Along with their concerns about the company's debt level, Schoenfeld and Paulson have also said the 26 percent ownership being offered to MetroPCS shareholders was not enough and that MetroPCS would be worth more as a stand-alone company.

But MetroPCS said the deal offered shareholders a 70 percent to 90 percent premium, including the net present value of projected cost savings from the merger.

The company also said the stock would be worth 19 percent less than the current price without the proposed $1.5 billion cash payment to shareholders.   Continued...

The logo of Deutsche Telekom AG is pictured at their headquarters, in this file photo taken in Bonn December 5, 2012. REUTERS/Ina Fassbender/Files