MetroPCS promotes T-Mobile deal after advisers pan it

Mon Apr 1, 2013 6:02pm EDT
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(Reuters) - MetroPCS Communications Inc urged shareholders to support its proposed merger with Deutsche Telekom AG's unit T-Mobile USA after two proxy advisory firms recommended that shareholders vote against it.

Proxy advisers Glass Lewis and ISS have backed efforts by two key activist investors to block the deal by recommending that shareholders vote against it at a special meeting on April 12.

MetroPCS said in a letter to shareholders on Monday there could be no assurance it would be able to deliver better shareholder value as a stand-alone wireless company.

But the company's shares closed up 1 percent on Monday as at least some investors bet that the advisory firm's recommendations could lead to a better deal.

Glass Lewis said late Thursday that the deal undervalued MetroPCS's contribution to the combined company. ISS said MetroPCS could thrive as a stand-alone company.

Madison Dearborn Partners, the second-largest shareholder, has thrown its weight behind the deal.

But Paulson & Co, the biggest MetroPCS shareholder, has said it would vote against the deal and P. Schoenfeld Asset Management, an owner of about 2.5 percent of MetroPCS shares, is leading a proxy battle against the transaction.

Another set of funds run by Westchester Capital Management, filed a lawsuit in U.S. federal court Thursday seeking an injunction to halt the planned shareholder vote. Westchester funds own over 3 percent of MetroPCS shares.

Roy Behren, a portfolio manager at the firm, said that Deutsche Telekom would need to adjust the terms of its offer, including the proposed $21 billion debt level of the combined company, to win over shareholders.   Continued...

Signage for a T-Mobile store is pictured in downtown Los Angeles, California August 31, 2011. REUTERS/Fred Prouser