The proposed merger of T-Mobile and Metro PCS is facing some scrutiny from an investment advisor with 7.5 million shares of MetroPCS stock voicing his opposition to the proposed merger with T-Mobile USA, announcing that he will vote against the merger. P. Schoenfeld Asset Management, which holds 2% of MetroPCS shares, sent communications to both Deutsche Telekom and MetroPCS on January 30th with a list of their complaints.
The investment firm is concerned that the deal did not provide a high enough valuation for MetroPCS shareholders, which would impact the company’s debt levels, which are believed to be “unsustainable” for the size of the company and its credit rating.” The firm also recommends that “it would be better for PCS to remain a stand-alone company” and explore other avenues of revenue.
“Based on the trading level of PCS stock, it appears that other investors share our opinion,” Schoenfeld said adding that this was substantially lower than share prices reached in 2011.
MetroPCS still backs the deal, which has been in the works for a while now. MetroPCS claims the deal is in the best interests of shareholders, and that it was “the result of a thorough process that began over two years ago and included the board and a special committee of the board considering a number of potential transactions with different strategic partners.”
However, Schoenfeld does state in the letter that if the deal is approved, MetroPCS shareholders could see their percentage of the combined company upped to 37%, compared to the current ratio of 26%. The current terms of the deal would dictate that MetroPCS would have a total of $23.3 billion in total debt and assets.