New York – Two major MetroPCS shareholders reversed position and announced support for the proposed merger of T-Mobile and MetroPCS after T-Mobile parent Deutsche Telekom revised the merger’s terms.
The announcements substantially improve the odds that the merger will be approved at an April 24 vote by MetroPCS shareholders. That vote was delayed from April 12 after Deutsche Telekom offered revised terms to quell mounting opposition to its initial terms.
The two shareholders are hedge funds Paulson & Co. and P. Schoenfeld Asset Management, which collectively own about 12 percent of the regional carrier’s shares.
Under the revised proposal, Deutsche Telekom will reduce the amount of loans that the combined entity’s shareholders would be required to take from Deutsch Telekom to $11.2 billion from $15 billion. Deutsch Telekom will also reduce the interest rate on the loans by 50 basis points. The revised proposal still envision a $1.5 billion cash payment to existing MetroPCS shareholders, and current MetroPCS shareholders would still own 26 percent of the shares of the combined company, with the rest owned by Deutsch Telekom.
“While Paulson needs to review the revised proxy statement before making a final decision, Paulson intends to vote for the merger as restructured,” Paulson said in a prepared statement.
For its part, P. Schoenfeld Asset Management said that subject to reviewing the revised proxy materials, it will withdraw its proxy solicitation campaign and not object to the proposed…merger, now that Deutsche Telekom has provided a revised offer that improves the value PCS shareholders will receive in the transaction.”
“While the revised transaction terms do not reflect all the improvements we were seeking, we feel our central goal of making the combined PCS/T-Mobile company more competitive and valuable for all shareholders, including Deutsche Telekom, resulted in obtaining superior value for PCS shareholders and believe that these revised terms are the best available alternative for PCS shareholders at this time,” the company said.