Deutsche Telekom AG (DTE.XE, DTEGY) is reviewing a sweeter bid
for U.S. wireless carrier MetroPCS Communications Inc. (PCS),
people familiar with the matter said. The company is likely to
improve the terms and could announce them as early as Wednesday,
one of the people said.
The German telecommunications company is trying to save a deal
to merge its U.S. unit, T-Mobile USA, with MetroPCS in the face of
heavy shareholder opposition over the terms. The new terms would
likely include a reduction in the amount of debt that will be
transferred to the new company, a change some MetroPCS shareholders
have sought, the people said.
Other details of an improved offer couldn't be learned. Senior
Deutsche Telekom officials were reviewing the improved offer
Wednesday afternoon in Germany, one of the people said.
The German company has previously said that its existing offer
was already good enough. Spokesmen for Deutsche Telekom and
MetroPCS declined to comment.
The deal currently offers MetroPCS shareholders about $4 a share
in cash and a 26% stake in the combined company, which would be
freighted with more than $20 billion in debt. Lowering the debt
load would increase the value of that equity stake.
MetroPCS shares were trading about 1% higher at $11.31 on
Wednesday morning in New York. They have fallen nearly 17% since
the deal was announced. The shares jumped ahead of that
announcement following news reports a deal was imminent.
MetroPCS shareholders are already voting on the deal in advance
of Friday's scheduled shareholder meeting, where it will either be
ratified or rejected. Deutsche Telekom has been watching the votes
come in as it considers sweetening its offer, and according to one
person, the early returns aren't encouraging that the deal will go
through on its current terms.
Should a sweeter offer emerge, the meeting could be delayed to
give investors a chance to reconsider their votes, the people
said.
Some large MetroPCS shareholders have argued for months that the
terms of the deal are too stingy. They have been concerned in part
by the plan to roll $15 billion of intercompany debt owed to
Deutsche Telekom into the new company, saying it could leave it
overburdened in the competitive U.S. wireless market.
Opponents of the deal got support last month from proxy advisers
Institutional Shareholder Services and Glass Lewis, both of which
said shareholders should vote against the merger. Their advice to
big investors like mutual funds isn't binding, but it is
influential, particularly in close contests.
Deutsche Telekom pursued MetroPCS after an earlier attempt to
get out of the U.S. market entirely by selling T-Mobile USA to
AT&T Inc. (T) for $39 billion. The Justice Department scuttled
that deal on antitrust grounds. Now Deutsche Telekom's strategy is
to strengthen T-Mobile through the MetroPCS merger, which would
give it new customers and valuable rights to the airwaves. The
merged entity's publicly traded stock could give Deutsche Telekom
an avenue to sell down its stake in T-Mobile over time.
-- Anton Troianovski, Eyk Henning and Spencer E. Ante
contributed to this article.
Write to Archibald Preuschat at Archibald.Preuschat@dowjones.com
and Thomas Gryta at Thomas.Gryta@dowjones.com
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