It looks like Deutsche Telekom has revised its merger offer for MetroPCS to make it more appealing. There's only 2 days left before MetroPCS's shareholders decide whether or not the prepaid wireless carrier will be joining forces with T-Mobile USA. According to The Wall Street Journal, Deutsche Telekom approved a much better bid in order to convince MetroPCS shareholders to vote in favor of the merger.
The improved offer will reduce the amount of debt MetroPCS will be responsible for when the merger completes. It will also reduce the debt's interest rate. Debt is one of the major factors holding back many of MetroPCS's biggest shareholders from approving the deal. While Deutsche Telekom seems to have addressed that, there are several other factors that it needs to consider, including MetroPCS's share in the merged companies, as well as the price of its shares.
When the deal goes through, MetroPCS will own only 26% of the merged company, and its shares will only be worth $4 each. Many proxy advisers, including Institutional Shareholder Services, an adviser to many major shareholders, has recommended that MetroPCS investors vote against the merger. The adviser, as well as many shareholders, have stated that MetroPCS has a chance of surviving on its own without T-Mobile's help.
While Deutsche Telekom's deal is a big improvement over its previous offer, it's still uncertain whether or not shareholders will bite. Sources have told The Wall Street Journal that the meeting on April 12th could be pushed to a later date in order to give shareholders more time to consider the revised offer. Before news of the improved merger offer, the chances of a merger happening were looking pretty grim. T-Mobile USA needs MetroPCS in order to compete against the other major carriers, and in order to build out its LTE network. We'll keep you updated on what happens at the merger meeting this Friday.
[via Wall Street Journal]