Tag Archives: Proposed Transaction

Business, Finance, Occupation & Industry

MetroPCS Merger in Further Danger

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By Dan Radovsky, The Motley Fool

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It looks like opponents of the proposed merger of MetroPCS with Deutsche Telekom subsidiary T-Mobile USA got strong support on Wednesday, according to The New York Times.

Institutional Shareholder Services has agreed with Paulson & Co. and P. Schoenfeld Asset Management that voting for approval of the transaction would not be in the interest of MetroPCS shareholders.

Paulson has a 9.9% stake in MetroPCS, Schoenfeld 2%, and both funds believe the deal would incur too much debt for the newly formed company and would not give MetroPCS shareholders enough of a slice of the enterprise.

What may prove influential in the outcome of the voting is this from ISS: “The ultimate question for PCS holders, therefore, is whether this offer is sufficient compensation for putting control of their investment in the hands of another strategic, DT [Deutsche Telekom], under whose control T-Mobile has appeared to have so vastly underperformed.”

P. Schoenfeld, which has been constantly filing proxies over the last several weeks urging shareholders to vote against the proposal, was thrilled with the ISS recommendation to turn down the deal.

“We are extremely pleased that ISS recognizes the Proposed Transaction between MetroPCS and T-Mobile (the “Combined Company”) is not in the best interests of PCS shareholders …” the fund said today in a statement.

P. Schoenfeld also quoted ISS as agreeing with merger opponents that MetroPCS would be better served staying as a stand-alone company, or possibly able to attract a better merger deal in the future: “Absent merging with T-Mobile, PCS will have enough cash on its balance sheet to dedicate to new spectrum and could continue operating as a stand-alone company. It may well, as many commentators have suggested, have additional M&A opportunities in the offing, given its attractive assets.”

The ISS appraisal may take some of the swagger out of T-Mobile CEO John Legere’s remark Tuesday that the merger would be “approved despite the greedy hedge funds that are trying to take a double-dip out of that process.”

Paulson, in a statement released last night, took umbrage to Legere’s characterization. The hedge fund “strenuously objects” to shareholders being called “greedy because they believe the current terms of the merger are poor for MetroPCS shareholders.”

“If anyone is being greedy here, it is Deutsche Telekom … It is not surprising that Deutsche Telekom is so eager to close this deal, as they get the lion’s share of the benefits,” Paulson continued.

Will the ISS analysis be the tipping point that ultimately undermines the deal — at least as it is currently structured? That will be determined at the special MetroPCS shareholders’ meeting on April 12.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

MetroPCS Merger Opponent Raises More Questions

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By Dan Radovsky, The Motley Fool

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The proposed merger of MetroPCS and T-Mobile USA has passed all the regulatory hurdles: vetting by the Department of Justice, the Federal Communications Commission, and the Committee on Foreign Investment.

All it has to do now is make it past the stockholders, who get to vote the deal up or down at a special shareholders meeting to be held on April 12. Unlike the governmental scrutiny, however, getting the merger past MetroPCS’ investors may not go as smoothly.

One very persistent major shareholder, P. Schoenfeld Asset Management, or PSAM, which owns 2% of MetroPCS’ outstanding shares, has met every company call for a “yes” vote on the merger with its own call for a thumbs down.

PSAM‘s latest appeal, poses a number of questions for shareholders to think about and for the company to answer. Here are a few:

  • “How does PCS explain the approximately 23% decline in its share price since the announcement of the Proposed Transaction, a period when the S&P is up 7.2% and the comparable index is up 0.6%?”
  • “How does PCS explain that its Chairman and CEO Roger Linquist has sold 2 million shares (approximately 28% of his holdings) at an average price of approximately $10 per share since December 12, 2012, and board member Kevin Landry’s Firm, TA Associates, has sold approximately 3.8 million shares since the Proposed Transaction was announced?”
  • “Why is PCS deducting $1.5 billion of future spectrum purchases from its value relative to T-Mobile?”
  • “Why is PCS contributing its intellectual property to the combined PCS/T-Mobile while DT is insisting on a royalty for the use of the T-Mobile name through a trademark license?”

PSAM has a powerful ally in its fight against the merger with T-Mobile and its parent company Deutsche Telekom. MetroPCS’ largest single stockholder, Paulson & Co., which owns 9.9% of the company, has filed its intent with the Securities and Exchange Commission to vote against the deal as it is now structured.

Paulson says it agrees with PSAM that “the new company will be saddled with an onerously large amount of debt,” and that “the interest rate on Deutsche Telekom‘s debt financing is far above market, based on the new company’s anticipated credit rating. Specifically, MetroPCS/T-Mobile will pay an egregiously high 7% interest rate on the $15 billion of intercompany debt.”

One more question: Where’s Roger?
Earlier this week, a joint announcement from Deutsche Telekom, T-Mobile USA, and MetroPCS listed the board of directors for the proposed new company. What made it interesting was not who was on it but who wasn’t.

Roger Linquist was nowhere to be found on the new board. Will he be out entirely? Two inquiries regarding this to MetroPCS have not been answered.

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Source: FULL ARTICLE at DailyFinance