MetrosPCS shareholders have filed a lawsuit to block a merger with T-Mobile USA, claiming that the MetroPCS board is “serving its own financial interests.” The lawsuit is against T-Mobile and its parent company Deutsche Telekom in addition to MetroPCS' board of directors and CEO. According to the current deal in place, the shareholders will receive $1.5 billion cash and a 26% stake in the company, with the German Deutsche Telekom holding the other 74%.
The lawsuit was filed in Dallas. Says the shareholders:
"The process leading to the proposed acquisition was tainted by conflicts, tilted towards T-Mobile and driven entirely by the board and company management, who together control 15.4 percent of PCS' outstanding stock and seek liquidity for their illiquid holdings."
Specifically, the lawsuit states that the deal was designed to discourage other bids so that the merger was guaranteed for Deutsche Telekom. Says TMONews, the shareholders are going after the companies for corporate waste, gross mismanagement, unjust enrichment, and the alleged breach of fiduciary duty. "PCS' officers and directors will receive millions of dollars in special payments," the complaint states.
The deal between MetroPCS and Deutsche Telekom was struck earlier this month. Although in place, it still requires regulatory approval from the FCC and Department of Justice, which will delay the closing until the middle of 2013. T-Mobile's CEO John Legere responded to the complaints with a statement that the deal was necessary in order to remain competitive with the big name carriers, such as Verizon, and is "about driving growth."