Shareholders Approve Merger between MetroPCS and T-Mobile USA

In March, we wrote that the U.S. Federal Communications Commission (FCC) was looking to approve a proposed merger with T-Mobile USA and Metro PCS Communications, Inc. What was interesting about it was that the FCC wanted to approve the merger without a vote.

Later in March, the Metro PCS board of directors sent their stockholders a letter laying out the benefits regarding the merger. The letter urged the stockholders to vote for the proposed combination with T-Mobile. This was followed up with another letter on April 1, describing significant benefits to Metro PCS’ stockholders.

On April 24 the stockholders took a vote. This has been an issue with the stockholders since October 2012. P. Schoenfeld Asset Management, one of the shareholders, led a proxy battle against the original deal. Another investor, Metro PCS’ largest shareholder, was also against combining the two companies.

On the flip side, there were many shareholders that were happy at the prospect of Metro PCS combining with a larger player. They were more interested in having the bigger player on their side than they were with the terms of the deal.

Not wanting to take any chances, T-Mobile USA’s parent company, Deutsche Telekom AG, decided to sweeten the pot. Of course, this was in response to pressure from the activist stockholders. Shareholders will receive $4.06 per share in cash plus stock equivalent to 26 percent of the combined company. The remaining 74 percent will be owned by Deutsche Telekom.

The main activists mentioned above both said that they were pleased with the improved terms. A shareholder from Dallas, Robert Capps, said "It was significant that they sweetened the offer, but I would have voted in favor of the previous terms."

If you haven’t figured it out yet, the vote for combining T-Mobile USA with Metro PCS was in favor. Metro PCS said that about 93 percent of the votes were cast in favor of the main proposal related to the deal.

You may recall that a couple of years ago in 2011, AT&T was trying to buy T-Mobile USA. Deutsche Telekom was instrumental in blocking the $39 billion deal. Instead of selling T-Mobile USA, they have been looking for a way to help gain a stronger foothold. The U.S. is key to the investment case for Deutsche Telekom. It earned 26 percent of group revenue here last year and 20 percent of its operating profit.