T-Mobile USA’s pending acquisition of MetroPCS looks to have been a deal a long time in the making, and according to some, could still see additional maneuvering.
MetroPCS released a proxy statement with the Securities and Exchange Commission late last week detailing the processes that culminated with T-Mobile USA’s proposed bid for the regional carrier in early October. Analysts that spent their weekend sifting through the document found that MetroPCS had been in at least some form of discussion with up to nine separate companies regarding a potential acquisition and that at least one company could still be set to put in a bid.
According to Macquarie Equities Research, MetroPCS was in discussions with DBSD, TerreStar Networks, Dish Network, Leap Wireless, U.S. Cellular, AT&T, Sprint Nextel and Verizon Wireless, in addition to T-Mobile USA, regarding a potential agreement. Macquarie Equities noted that Dish Network could still be preparing a bid for MetroPCS.
“With [MetroPCS] shares now trading below the $11 reported [Dish Networks] bid price, we believe that investors should not rule out the possibility of a [Dish Networks] counterbid,” explained Macquarie Equities Research in a report. “However, we feel that synergies are much higher for T-Mobile or Sprint.”
Dish Networks was been vocal as of late of its interest in gaining a foothold in the wireless space, including reported talks with Google. The company is looking to gain approval from government regulators to use approximately 40 megahertz of spectrum in the 2 GHz band initially set aside for satellite communications to operate a terrestrial network.
Others noted that Sprint Nextel could still be preparing a counter-bid of its own in an attempt to acquire MetroPCS. Sprint Nextel, which recently received an offer from Japan’s Softbank to acquire 70% of the company for $20 billion, had reportedly pulled back from making an offer on MetroPCS earlier this year.
“Based on our reading of the proxy, someone from [Sprint Nextel] seemed to call [MetroPCS] on [Oct. 2] (day before official merger announcement) indicating it would be receiving a large investment in capital (presumably SoftBank) and could not counter immediately, but hoped a breakup fee was ‘reasonable,’” said Jennifer Fritzsche, senior analyst at Wells Fargo Securities.
T-Mobile USA’s proposed deal for MetroPCS includes a “small” breakup fee that would see T-Mobile USA paid $250 million and MetroPCS $150 million should the deal fall apart.
MetroPCS’ stock (PCS) was trading up 2% early Monday at just under $11 per share.
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