MetroPCS Shareholder Agree to T-Mobile Merger

Michael Teague |

MetroPCS Shareholder Agree to T-Mobile MergerShareholders of MetroPCS Communications (PCS) voted on Wednesday to approve a merger with the nation’s fourth largest provider of wireless services, Deutsche Telekom AG’s T-Mobile (DTEGY).

The terms of the reverse merger will give PCS shareholders $4.06 per share in cash as well as 26 percent of the combined company’s stock, with Deutsche Telekom taking ownership over the rest of the shares for at least 18 months.

According to Deutsche Telekom, the deal will close by the end of the month.  The new company will be called T-Mobile USA, and will be traded on the New York Stock Exchange under the ticker TMUS.

For T-Mobile, the move is seen as a means of increasing its ability to compete with the three largest wireless service providers in the U.S., Verizon Wireless (VZ), AT&T (T), and Sprint Nextel (S).  The company hopes that adding MetroPCS’s spectrum access to its own will allow it greater flexibility in this regard.

Deutsche Telekom has been trying for some time to help T-Mobile gain a larger share of the U.S. wireless market.  In 2011, an attempted $39 billion buyout deal from AT&T was prevented by federal antitrust regulators.

The current deal, which meets all the necessary regulatory requirements, almost hit a roadblock when PCS shareholders signaled their displeasure with the terms of the original offer.  Deutsche Telekom, however, caved to pressure and agreed to take a larger bite out of the T-Mobile USA’s debt, leading to today’s vote.

Last week, the makings of a bidding war began to coalesce around Sprint Nextel when the Japanese telecom company SoftBank’s buyout offer was bested by one from Dish Network (DISH).

Mergers in the telecommunications industry these days come in the context of an FCC vote set to take place next year that could very well facilitate access to the wireless spectrum in the U.S. to smaller carriers.

Shares for MetroPCS were down 0.73 percent to $11.61 ahead of the close.

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Companies

Symbol Name Price Change % Volume
DISH DISH Network Corporation 59.00 -0.93 -1.55 1,792,006
S Sprint Corporation 8.48 -0.26 -2.97 19,560,796
VZ Verizon Communications Inc. 51.49 0.36 0.70 10,101,462
STNR Steiner Leisure Ltd. (Bahamas) n/a n/a n/a 0
T AT&T Inc. 40.38 -0.03 -0.07 17,105,180

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