Deutsche Telekom improves MetroPCS offer

11 April 2013 | Kavit Majithia


Deutsche Telekom has succumbed to pressure from MetroPCS investors by declaring it will sweeten its offer to acquire the company.

The German company, through its T-Mobile USA subsidiary, has conceded to commit to reduce the amount of debt the merged company will carry.

Some MetroPCS shareholders have hit out at what they perceive as a low price offered for the company, and were reportedly set to voice concerns at a planned shareholder meeting on Friday. 

Deutsche Telekom has claimed its latest move is the “best and final offer”, with plans to reduce debt in the merged company by $3.8 billion to $11.2 billion, and cut interest rates on the loans taken by the company by 50 basis points. 

Pressure had been building on Deutsche Telekom to improve its offer ahead of Friday’s shareholder meeting, and the German operator has claimed its revised offer will “significantly increase the equity value of the combined company”.

Its other concession, of lowering loan interest rates, has been made to “reflect the new capital structure of the combined company, the improved capital markets environment in recent months, and the interest rate level of MetroPCS newly issued $3.5 billion of bonds priced in March,” added Deutsche Telekom in a statement.

PSAM, a large shareholder in MetroPCS, had been campaigning against the deal, claiming the company’s long-term future would hold better independently, under the terms of Deutsche Telekom’s original offer.

Speaking of the revised offer, the shareholder said: “PSAM is pleased that Deutsche Telekom... has taken steps to improve the terms being offered to PCS shareholders in the proposed MetroPCS/T-Mobile transaction.” It added in a statement: “We are reviewing considering the details of Deutsche Telekom’s revised offer with our advisers at this time and will provide MetroPCS shareholders our view regarding the new terms in short order.”

Some shareholders have still called for additional cash concessions, with MetroPCS shareholders set to receive $1.5 billion in cash and 26% of the new company as part of the present offer in place.