Image Credit: Bloomberg
When Deutsche Telekom announced plans to merge its T-Mobile USA subsidiary with MetroPCS, most expected that the acquisition would go
fairly smoothly. The two companies joining forces simply made sense, and gave the combined company a more solid footing against the larger Verizon, AT&T and Sprint networks. But the potential for a deal looks a bit less clear this morning, after Proxy Adviser Institutional Shareholder Services (ISS) recommended that the MetroPCS shareholders should reject the merger and continue to operate independently, according to a WSJ report.
If you’ve never heard of ISS, you’re likely not alone. The ISS is an advisory firm which advises big shareholders on how to vote on hot-button issues such as corporate elections and mergers and acquisitions. The report cites two predominant reasons for such a recommendation; shares of MetroPCS are down over 14% since the merger was announced, and the sentiment that MetroPCS will retain too small an equity split in the combined company.
“In light of the negative market response to this transaction (shares are down 14.4% since announcement), the lower equity split than justified by the contribution of PCS to the combined entity, and the potential for PCS to continue to thrive as a stand-alone company, shareholders should vote against this transaction” - ISS Report
While shareholders are not obligated to take the ISS’ advice, a recommendation from the ISS often influences the outcome of shareholder votes. Two large shareholders had already announced their opposition to the deal, perhaps giving more weight to the ISS’ recommendations.
The merger issue will come to a vote on April 12th. All regulatory approvals have already been granted, MetroPCS’ Board of Directors has signed off on the deal, and if the MetroPCS shareholders vote to approve the merger, it will essentially be a done deal and the two companies will begin operating as one unit under the T-Mobile name. We’ll know more in a few weeks.
Via: Wall Street Journal
This article was written by Anthony Domanico
Anthony is the Editor in Chief of Techgress, and a big mobile and gaming geek. He's covered mobile technology for the better part of three years, and gets excited about shiny, new things. He currently uses an iPhone, iPad Mini, and Nexus 7, but Windows Phone 8 and BlackBerry devices are never too far away.