The final vote on T-Mobile USA’s big merger deal with MetroPCS was supposed to take place Friday, but given mounting Metro shareholder opposition, T-Mo parent Deutsche Telekom appears a bit skittish over its outcome. MetroPCS has now rescheduled its shareholder vote for April 24, while DT has submitted a new offer that might make the merger more palatable to its opponents.
The revised deal would still create a publicly traded company, and DT would still maintain its originally proposed 74 percent ownership. But DT offered to slice $3.8 billion off of the debt the combined company would carry, dropping it to $11.2 billion. DT also said it would drop the interest rate on that debt by half a percentage point and agree to a longer lockup period of 18 months in which DT couldn’t sell it shares.
Metro’s owners wouldn’t get additional stock, nor would their $4.09-per-share buyout increase, but the DT tweaks ultimately would make the equity they do receive more valuable. DT estimates the lower debt level and lower interest rates would add $3 in value to Metro stockholders’ shares.
At first, the T-Metro deal looked like it would sail through the approval process. It encountered no antitrust opposition form the U.S. Department of Justice and the Federal Communications Commission found no regulatory reason to hold it up. The Committee on Foreign Investment in the U.S. raised no national security concerns.
But Metro’s institutional shareholders led by hedge fund Paulson & Co. claimed they were getting a raw deal and tried to recruit other stockholders to its side. DT at first stood its ground, saying the original offer was the best deal shareholders would get. Why did it change its mind? Well, according to Bloomberg, DT got a sneak peak at the absentee proxy ballots as they came in before Friday’s meeting. Apparently it didn’t like what it saw, leading to its decision to delay the vote and sweeten the pot.
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