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As the shareholder vote comes closer, T-Mobile deal with MetroPCS is in real danger of failing

Posted: , by Alan F.

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As the shareholder vote comes closer, T-Mobile deal with MetroPCS is in real danger of failing
With MetroPCS stockholders set to vote on the merger with T-Mobile on April 12th, MetroPCS sent out another letter to stockholders requesting that they vote for the deal. The way that these votes work is that only the latest vote submitted by each holder is counted, which is why the nation's fifth largest carrier once again is canvassing its holders.

Unfortunately for those in favor of the deal, at least two proxy solicitation firms, including influential ISS, have recommended to big share holders that they vote against the union of the fourth and fifth largest U.S. carriers. And the largest stockholder in the carrier, Paulson & Co, has announced its intentions to vote against the merger. Also voting "No" will be P. Schoenfeld Asset Management, a fund with a large holding of MetroPCS stock.

Those who own MetroPCS stock will receive $4.06 for each share. In addition, they will together have a 26% stake in the new, combined company. The stock will undergo a 1 for 2 reverse split after the deal closes, meaning that for every 100 shares that a MetroPCS owner has now, he will have 50 shares when the deal is complete. The stock price will double,which means that the value of the stock will remain the same. The reason to do such a split is to get the shares over the $5 threshold as many mutual funds will not buy a stock that trades for less than $5.

You might be wondering about T-Mobile holders. Well, T-Mobile is a private company owned by German telco giant Deutsche Telekom. They will own 74% of the combined company after the merger closes, but they are also the source of the $1.5 billion in cash that MetroPCS holders will be receiving.

All regulatory agencies have signed off on the deal and all that is left is the stockholder vote. If both companies get a strong indication that the deal is not going to go through, they can scuttle the merger or change the terms by sweetening the pot. As is usual in a takeover deal, much of MetroPCS stock is now owned by the Arbs who have no alliances except to their bank accounts. These guys will be more than happy to see a higher price offered for MetroPCS shares.

source: MetroPCS

9 Comments
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posted on 01 Apr 2013, 11:12 2

1. Note2waitingonNote3 (banned) (Posts: 87; Member since: 19 Mar 2013)


Deal will happen period.

posted on 01 Apr 2013, 11:16 2

2. tigermcm (Posts: 748; Member since: 02 Sep 2009)


I don't understand whats wrong with the deal that the above mentioned are voting against it, am I missing something?

posted on 01 Apr 2013, 15:25

6. TheMan (Posts: 418; Member since: 21 Sep 2012)


As I recall, in the last year or two there were a couple of offers for Metro that valued it much higher. Unfortunately, these never came to fruition (I don't know why; it may have been overvalued).

It's possible these investors are holding out for more money in their pockets.

posted on 01 Apr 2013, 11:48

3. TheLolGuy (Posts: 483; Member since: 05 Mar 2013)


Maybe T-Mobile's planned LTE coverage for 200 million people by year's end was assuming the deal goes through. If thats the case, maybe they won't meet their goal after all...

posted on 01 Apr 2013, 13:12 1

4. lovenyc8 (Posts: 164; Member since: 13 Mar 2013)


f**k share holders this deal need to happen love you tmobile

posted on 01 Apr 2013, 15:21 1

5. Zero0 (Posts: 583; Member since: 05 Jul 2012)


Ridiculous. For one, MetroPCS is worth far more to T-Mobile than it is to anyone else, mostly because Metro has the spectrum that T-Mobile needs for its network plans. Further, a merger of any wireless companies will serves to reduce overhead (fewer towers between the companies, namely), which increases value -- the whole is greater than the sum of its parts, if you will. Metro is worth more as a subsidiary than it is worth alone, and apparently, it isn't worth more than what T-Mobile is offering, because no one else has made an offer in the months since T-Mobile's proposal was made.

I want this to go through. While I hate to see a decrease in competition, I think T-Mobile and MetroPCS combined can start to break down the former Bell duopoly. "T-Metro" will have the spectrum needed to build a premier network, and it's only a matter of time before they make it happen.

posted on 01 Apr 2013, 22:03 1

7. alouden (Posts: 215; Member since: 18 Oct 2011)


I hope it happens too. I am itching to make the jump to T-mobile. Just fed up with Verizon.

posted on 01 Apr 2013, 23:05 1

8. archangel9 (Posts: 231; Member since: 07 Feb 2010)


It will happen.I feel it in my gut.TMobile got too much to gain and so does Metro PCS

posted on 02 Apr 2013, 13:09 1

9. alouden (Posts: 215; Member since: 18 Oct 2011)


I have a feeling tmobile will (have to) sweeten the deal. I hope it does happen. I am seriously considering the jump to tmobile.

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