Despite recent objections from a prominent investors and advisors, MetroPCS continues to believe that its pending merger with T-Mobile USA remains the best way for investors to see a financial gain.
MetroPCS this morning sent out a letter to investors stating that they should vote in favor of the current deal that will see the carrier gain control of 26% of the combined operations for approximately $1.5 billion paid to MetroPCS investors. MetroPCS shareholders are scheduled to vote on the proposed deal on April 12.
The letter takes aim at comments from a recent Institutional Shareholder Services report that claimed the proposed transaction does not fully value MetroPCS and that the market has reacted negatively to the proposed terms of the deal. MetroPCS also looked to downplay concern that it was not garnering enough relief on its debt load.
Some MetroPCS shareholders filed a lawsuit shortly after the deal was announced in October to block the deal citing claims that MetroPCS’ management was set to receive special payments should the deal be approved and that investors would be short-changed on the value of the company’s stock.
“In our review of the transaction, which also calls for a definitive cash payment to MetroPCS shareholders, we have concerns that MetroPCS’ resulting ownership may undervalue its contribution,” stated investment firm Glass Lewis & Co. in a blog posting late last week. “The current deal appears to provide a small, if any, premium for what amounts to a takeover of MetroPCS. Alternatives to the deal have drawbacks as well. There’s always the risk that Deutsche Telekom may walk away if investors go against the deal.”
Many analysts have noted that these last minute objections to the proposed deal have come too late in the process to derail the transaction, though they suspect the claims may force T-Mobile USA to sweeten its offer to MetroPCS investors to garner full satisfaction. This pressure was highlighted by T-Mobile USA’s recent claims to the strength of its recently launched LTE service, which the carrier has said it would be able to support with up to 40 megahertz of clean spectrum should it garner access to MetroPCS.
MetroPCS’ stock (PCS) was trading down slightly this morning, but has dropped around $2 per share since the deal with T-Mobile USA was announced.
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