Tags: MetroPCS | shareholder | offer | meeting

Deutsche Telekom Mulls Improved MetroPCS Offer

Thursday, 04 Apr 2013 02:54 PM

Deutsche Telekom is looking into improving the terms of a proposed merger of its T-Mobile USA unit with MetroPCS Communications as a last resort to win over shareholders ahead of a vote on the deal next week, two people familiar with Deutsche Telekom's thinking said.

The board of the Bonn-based company is divided on whether to sweeten the terms of the cash and share deal to secure approval at a MetroPCS shareholder vote on April 12 and is hoping it could still avoid any change, the people said.

"They have a week to decide and they are working on it at the moment," said a third person who is familiar with MetroPCS's thinking. The people didn't want to be named because the talks are private.

A spokesman for Deutsche Telekom said on Thursday the German firm had no plans to amend the terms of the deal. In recent weeks, Deutsche Telekom has reiterated that the current proposal was the best for shareholders of both firms.

Asked whether the firm was working on sweetening the deal, a spokesman said: "No, we can flatly deny that."

MetroPCS shares were up 18 cents, or 1.64 percent, at $11.14 in early afternoon trade on the New York Stock Exchange. A spokesman for MetroPCS declined to comment.

Deutsche Telekom's financial advisers, Morgan Stanley and Lazard, also declined to comment.

MetroPCS agreed to the deal in October, but Deutsche Telekom is now being forced to find ways to charm MetroPCS shareholders after activist investors holding about 12 percent of MetroPCS stock contested the terms and started wooing others.

"The biggest problem has been the capital structure and a considerable lack of transparency," said Doug Polley, chief investment officer of rebel investor PSAM, during a presentation to other MetroPCS shareholders on Thursday.

"Voting down the proposed deal, even without a revised offer from DT (Deutsche Telekom) or another buyer surfacing, still yields superior value to PCS shareholders," PSAM told shareholders during the presentation.

Activist investor Paulson & Co, the biggest MetroPCS shareholder, has also committed to vote against the deal, and investor advisory firms ISS and Glass Lewis have recommended MetroPCS shareholders vote against the deal.

However, Madison Dearborn Partners, the second-largest shareholder, has thrown its weight behind the deal and smaller advisory firm Egan Jones has backed it as well.

Deutsche Telekom needs a simple majority of shareholders for the deal to pass.

Failure for Deutsche Telekom, which already saw an attempt to sell T-Mobile USA to AT&T knocked back by competition regulators, could have big repercussions.

The German telecom group needs to combine with MetroPCS to close the gap with bigger U.S. rivals and free up resources to invest in its domestic market.

Under the October deal, MetroPCS shareholders would get $4.06 per share in cash plus stock equivalent to 26 percent of the combined company. Deutsche Telekom will own the rest.

The new company will have almost $19 billion in net debt, including a $15 billion loan from Deutsche Telekom, which rebel MetroPCS shareholders say is unfairly priced.

The combined company would have revenue of $24.8 billion and 42.5 million subscribers, according to company estimates.

© 2017 Thomson/Reuters. All rights reserved.

 
1Like our page
2Share
Companies
Deutsche Telekom is looking into improving the terms of a proposed merger of its T-Mobile USA unit with MetroPCS Communications as a last resort to win over shareholders ahead of a vote on the deal next week.
MetroPCS,shareholder,offer,meeting
521
2013-54-04
Thursday, 04 Apr 2013 02:54 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved