Deutsche Telekom (DT) and MetroPCS Communications have signed a definitive agreement to combine T-Mobile USA and MetroPCS. The deal is structured as a recapitalization in which MetroPCS will declare a 1 for 2 reverse stock split. MetroPCS shareholders…
Deutsche Telekom (DT) and MetroPCS Communications have signed a definitive agreement to combine T-Mobile USA and MetroPCS.
The deal is structured as a recapitalization in which MetroPCS will declare a 1 for 2 reverse stock split. MetroPCS shareholders will receive a US$1.5bn cash payment, equalling about US$4.09 per share prior to the reverse stock split.
MetroPCS will acquire all of T-Mobile’s capital stock by issuing 74% of MetroPCS’ common stock to Deutsche Telekom on a pro forma basis. The shareholders of MetroPCS will retain 26% ownership in the combined entity.
DT said it will roll its existing intercompany debt into new US$15bn senior unsecured notes of the combined company, provide the combined company with a US$0.5bn unsecured revolving credit facility and provide a US$5.5bn backstop commitment for certain MetroPCS third-party financing transactions.
Speaking in a conference call, Deutsche Telekom CEO Rene Obermann said he did not expect the transaction to impact DT’s shareholder remuneration policy or its 2012 guidance.
The new board also batted away industry speculation that the merger might face similar compatibility problems that dogged Sprint/Nextel, saying it was confident in its ability to integrate the networks seemlessly.
The companies said the transaction will create the leading value carrier in the US.
The merger, which is expected to close in H1/2013 following regulatory and MetroPCS shareholder approval, received the green-light from DT’s supervisory board and MetroPCS’ board of directors in separate meetings that took place this morning.
Following the merger the new company will retain the T-Mobile name and will have expanded scale, spectrum and financial resources. DT says this will allow T-Mobile to aggressively compete with the other national US wireless carriers.
Morgan Stanley acted as lead financial advisor and issued a fairness opinion to Deutsche Telekom. Lazard acted as financial advisor to Deutsche Telekom.
Wachtell, Lipton, Rosen & Katz, Cleary Gottlieb Steen & Hamilton LLP, K&L Gates, and Wiley Rein LLP are serving as legal counsel to T-Mobile and Deutsche Telekom.
JP Morgan acted as lead financial advisor to MetroPCS and also advised MetroPCS with regard to post transaction capital structure. Credit Suisse also acted as a financial advisor to MetroPCS.
Evercore Partners acted as financial advisor to MetroPCS and issued a fairness opinion. Gibson, Dunn & Crutcher LLP, Paul Hastings and 4 telecoms lawyers are serving as legal counsel to MetroPCS. Akin Gump and Fulbright & Jaworski served as counsel to MetroPCS’ special committee.
