MetroPCS Slips As Investors Await Vote
NEW YORK (TheStreet) --Shares of MetroPCS Communications Inc.
PCS fell 0.1% to $10.89 after adding 4% on Thursday after the ISS recommendation.T-Mobile USA chief executive John Legere had suggested MetroPCS shares would drop if the deal were scuttled.
The transaction would pay MetroPCS investors $4.08 in cash and give them, collectively, 26% of the equity in the combined company. The new telecom would have more than $20 billion in debt, including a $15 billion note provided by T-Mobile USA parent Deutsche Telekom AG.
Deutsche Telekom would have control of the company's board, balance sheet and strategic direction.
"The ultimate question for
MetroPCS responded Thursday that "ISS's report contains material flaws and reaches the wrong conclusion," and maintained that the deal would produce savings and other benefits worth $6 billion to $7 billion. The telecom noted that Egan-Jones Ratings Co. recommended voting in favor of the merger.
P. Schoenfeld Asset Management LP, with about a 2.5% stake, and Paulson & Co., holding nearly 10%, have objected to terms of the merger and the debt associated with the deal. P. Schoenfeld urged MetroPCS to move the shareholder vote from April 12 to late June.
The recommendation from ISS could hold sway with stock index funds, suggested Jennifer Fritzsche of Wells Fargo Securities LLC in a note. "In our view, TMobile is too far along the path to walk away from this deal," Fritzsche wrote.