T-Mobile USA sweetens bid for US carrier MetroPCS

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Associated Press

Posted on April 11, 2013 at 10:05 AM

Updated Thursday, Apr 11 at 10:07 AM

BERLIN (AP) — Deutsche Telekom AG, the parent company of T-Mobile USA, has raised its bid for MetroPCS Communications Inc. to placate shareholders for the cellphone carriers.

The announcement late Wednesday came ahead of a special shareholders meeting being held by Dallas-based MetroPCS on Friday. Major MetroPCS shareholders had voiced their opposition to the deal, saying they were not getting a fair share of the combined company.

Two shareholder advisory firms had also said they opposed the deal last week, sending shares of MetroPCS up in expectation of a sweetened bid from Deutsche Telekom. The German company called its new bid its "best and final offer."

MetroPCS's stock fell 6 cents, or 0.5 percent, to $11.50 in morning trading Thursday in the U.S. Shares of Deutsche Telekom rose 2 percent in Frankfurt trading.

Analyst Kevin Smithen at Macquarie Capital said the new offer will win the support of shareholders and advisory firms. He raised his price target on the shares from $13.50 to $15 in a morning research note.

The deal would merge the fourth- and fifth-largest cellphone carriers in the U.S. and boost T-Mobile USA's chance of competing with larger carriers Verizon Wireless, AT&T Inc. and Sprint Nextel Corp.

Deutsche Telekom said the original offer had T-Mobile USA contributing $15 billion in debt to the combined company. The new offer reduces that amount to $11.2 billion, effectively making the combined company more valuable.

Deutsche Telekom says it will also reduce the interest rate on those loans by 50 basis points.

The ownership structure remains unchanged, with 26 percent of shares being held by current MetroPCS shareholders and 74 percent by Deutsche Telekom.

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