Light Reading

MetroPCS Investors Try to Block T-Mobile Deal

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
10/16/2012
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Some MetroPCS Inc. (NYSE: PCS) shareholders are trying to block the operator's merger with T-Mobile US Inc. , claiming the $1.5 billion deal undervalues the company.

Courthouse News Service reports that MetroPCS shareholders filed two lawsuits in the Dallas Country Court last week.

The complaints claim that:

  • The deal "drastically undervalues" MetroPCS at $12.48 per share.
  • The deal was structured to favor one buyer -- T-Mobile owner Deutsche Telekom AG (NYSE: DT) -- with clauses that allow it to make a new matching bid if rivals attempt to top its offer.
  • Executives from MetroPCS stand to get millions of dollars in special payments not being made to ordinary shareholders through the deal.

Why this matters
Blocking a T-Mobile/MetroPCS merger would make Deutsche Telekom's exit from the U.S. market a much more difficult affair.

For more


— Dan Jones, Site Editor, Light Reading Mobile

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krishanguru143
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krishanguru143,
User Rank: Light Beer
12/5/2012 | 5:18:58 PM
re: MetroPCS Investors Try to Block T-Mobile Deal




What is it with lawsuits?  The fact is, if the majority of the shareholders approve the deal, that hurdle is cleared.  A lawsuit will get them nowhere nor more money.  The court also won’t block the deal as it is out of the courts hands.  First, I have yet to hear that the shareholders have actually voted for or against the deal and second, if the majority did approve it, what could the court do anyway?  At best, the lawsuit is premature and at worst, it is frivolous.

 

Chances are they are just trying to get more money but it could backfire, they spent money trying to get more and get nothing additional at the end of the day but a bill from the attorney.




Pete Baldwin
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Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:18:58 PM
re: MetroPCS Investors Try to Block T-Mobile Deal


These kinds of lawsuits have become routine and have gotten quite annoying.


I don't think they really start with shareholders. What happens is a legal firm zooms in on a deal, finds a shareholder (not a big one) and initiates a suit. It has nothing to do with the shareholder vote; the hope is to get a settlement.


That's my impression, anyway.

krishanguru143
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krishanguru143,
User Rank: Light Beer
12/5/2012 | 5:18:57 PM
re: MetroPCS Investors Try to Block T-Mobile Deal




So we’re sort of on the same page.  I truly think they are going to be high and dry at the end of the day though.  With the shareholders not even approving the deal yet, there is nothing to block in the eyes of the court.  The deal still needs to get regulatory approval as well.  The earliest a lawsuit could be filed by the shareholders would be after an approval by the shareholders, but even then, the court really couldn’t block the deal.  As long as the majority approved the deal, then the few that don’t like it have no grounds for a lawsuit.




krishanguru143
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krishanguru143,
User Rank: Light Beer
12/5/2012 | 5:18:55 PM
re: MetroPCS Investors Try to Block T-Mobile Deal




And that is a risky move as the court could easily dismiss the lawsuit as it is premature.   The court could also grant reclamation of legal fees from the investors listed.




Pete Baldwin
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Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:18:55 PM
re: MetroPCS Investors Try to Block T-Mobile Deal


I don't think the idea is to win the suit or to even bring it to court. The idea is to irritate the company into paying a settlement immediately, because it'll be cheaper and faster.

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