ISS suggests that MetroPCS could get a better deal than the one they are being offered, which is $4.06 a share and 26% of the combined company. The report also suggests that MetroPCS does not need this merger to survive. T-Mobile owner Deutsche Telekom ends up with 74% of the company after the merger closes. At closing, the combined company plans on reducing the number of outstanding shares and raising the stock price with a 1 for 2 reverse split. The investor's stock will have doubled in price, but he will own half the number of shares as he did before the split. While the actual monetary effect is a wash, many funds are not allowed to buy a stock trading under $5. The reverse-split will take the stock over that threshold.
After the recommendation by ISS, MetroPCS issued a statement saying that the ISS report "contains material flaws and reaches the wrong conclusion." The merger has received regulatory approval by all necessary agencies and now awaits the results of the MetroPCS stockholders vote set for April 12th. What was once seen as a layup, the deal now is in jeopardy and we could see some fireworks before the April 12th vote. The bid could be raised, or another party could make a blockbuster deal to purchase either T-Mobile or MetroPCS.