Proxy advisor Glass Lewis has recommended MetroPCS shareholders vote in favour of Deutsche Telekom’s revised offer for the operator. The firm had criticised Deutsche Telekom’s first offer to combine T-Mobile USA and MetroPCS saying it undervalued…
Proxy advisor Glass Lewis has recommended MetroPCS shareholders vote in favour of Deutsche Telekom’s revised offer for the operator.
The firm had criticised Deutsche Telekom’s first offer to combine T-Mobile USA and MetroPCS saying it undervalued the target and said MetroPCS’ board should have conducted a more public sales process to achieve a better return for shareholders.
Last week Deutsche Telekom improved the terms of its offer, paring the debt of the proposed merged company would hold by US$3.8bn and cutting the interest on that debt.
The new offer has received backing from activist investors that were vehemently against the initial proposal. Glass Lewis has also been convinced by the amended proposal, saying that new offer resolves its prior concerns.
“The revised terms of the proposed merger represent a material improvement in the expected value that MetroPCS shareholders will receive in the transaction,” it said in its report.
“While MetroPCS shareholders will own the same 26% equity stake in the combined company, that stake is now implicitly larger following the debt reduction and should be more valuable following the capital structure improvement and interest rate reduction.”
The advisory firm also noted that MetroPCS may not have as many options as it did before.
“The number of realistic strategic partners for MetroPCS beyond T-Mobile may be getting smaller, especially considering Dish Network’s recent bid for Sprint Nextel, both of which were previously interested in acquiring MetroPCS but might not be after a potential tie-up of their own.”
Meanwhile MetroPCS’ board has agreed to reimburse activist investor P. Schoenfeld Asset Management (PSAM) for the cost of its proxy solicitation, providing the transaction now closes. It said PSAM’s campaign cost roughly US$2.8m.
MetroPCS shareholders are set to vote on Deutsche Telekom’s revised reverse merger at an EGM on 24 April.
