Battle over Telecom Merger Enters the Endgame

As proposed last October, the deal calls for MetroPCS to declare a 1-for-2 reverse stock split, pay $1.5 billion in cash to shareholders and give Deutsche Telekom 74% of the surviving company. Proxy advisory firm Glass Lewis has said that the deal undervalues Metro’s contribution to the merged firm. Another proxy advisory firm, ISS recommends against the deal saying that Metro can make it on its own.

In its letter to shareholders, MetroPCS says that management “thoroughly explored all strategic alternatives” and shareholders should not assume that another buyer will emerge if the deal with T-Mobile falls through. Metro also claims that the proposed combination is the “best strategic alternative to maximize stockholder value.”

Two of Metro’s largest shareholders, Paulson & Co. and P. Schoenfeld Asset Management, have said they will vote against the deal. Madison Dearborn Partners, the company’s second-largest shareholder, will support the proposed merger.

Shares of MetroPCS are up about 1% in premarket trading this morning, at $11.00 in a 52-week range of $5.53 to $14.51.