No merger between T-Mobile USA, Inc. and MetroPCS Communications Inc (NYSE:PCS)

Northern, WI 03/28/2013 (avauncer) - On March 28, 2013, Institutional Shareholder Services Inc., which was hired to consult T-Mobile on the merger of T-Mobile USA Inc.’s  with MetroPCS Communications Inc (NYSE:PCS) (Current $10.89, up by 3.42%), announced its recommendation against the merger. This was in sync with the largest stakeholder of MetrocPCS who too was against the merger.

The advisory firm Institutional Shareholder Services Inc grounds for the negative recommendation was that terms are not favorable for the merger and MetroPCS has to potential to thrive as an independent firm. Further, the investor-advisory firm said that MetroPCS could enhance its network by adding more wireless airwaves which could provide it the much-needed momentum. This could also lead to more acquisition offers in future. ISS that the MetroPCS is sitting on cash balance of $1.5 Billion which is enough for the company to invest in the new spectrum. Based on these parameters, Institutional Shareholder Services Inc advised against the merger as it feels the time is not right.

Another investor-advisory firm, Glass, Lewis & Co is also due to submit its report on the above mentioned merger very soon.

The largest stakeholder of MetroPCS, Paulson & Co. which holds close to 10.0% of the total outstanding shares of the company is also against the merger. It believes that Deutsche Telekom AG (ADR)(PINK:DTEGY) (Current $10.51, up by 0.38%), the largest telecom company in Germany is offering too low a price for the acquisition. Deutsche Telekom AG (ADR)(PINK:DTEGY) is offering $7 - $8 per share versus the current stock price of MetroPCS is $10.53 (as on March 27). Paulson & Co. was seconded by P. Schoenfed Asset Management, a small investor in MetroPCS. However, on the contrary, the second bigger stakeholder in MetroPCS, Madison Dearborn Partners LLC is favoring the merger.

It is believed that MetroPCS would be burdened with debt after the merger. Given the complicated nature of a reverse merger, falling back on the advice of investment consultant firm would be prudent. However, investors supporting the merger are of the view that this would provide
MetroPCS the platform to compete with larger carrier companies.

ISS has some renowned mergers into its accounts. Going against the support of Walter Hewlett (a board member of Hewlett Packard), ISS recommended a successful merger between Hewlett-Packard Company (NYSE:HPQ) (Current $23.74, Up by 0.68) and Compaq Computer Corp in 2002.