MetroPCS Says Proxy-Advisory Firms Back Merger

MetroPCS Communications Inc. (PCS) said proxy-advisory firm Institutional Shareholder Services has recommended shareholders vote in favor of a merger with T-Mobile USA, reversing its prior opinion, after terms of the deal were sweetened.

The revised recommendation comes a day after fellow proxy firm Glass Lewis & Co. also shifted course and recommended MetroPCS shareholders vote in favor of the proposed merger.

"We are pleased that both ISS and Glass Lewis recognize the enhanced stockholder value and compelling benefits created by the amended terms of the proposed combination of MetroPCS and T-Mobile," MetroPCS Chairman and Chief Executive Roger D. Linquist said Wedensday.

T-Mobile owner Deutsche Telekom AG (DTEGY, DTE.XE) sweetened its bid for MetroPCS after unhappy shareholders appeared poised to vote the deal down. Opponents of the deal were supported by Glass Lewis and ISS, which had called the terms unfair.

Deutsche Telekom improved the terms by reducing the amount of debt to be loaded on the combined company and reducing the interest rate on that debt.

In its revised recommendation Wednesday, ISS said the improved terms of the deal agreement "have enhanced the economic value PCS shareholders will receive in this merger."

"Given the reduced debt load that will be carried by the new company and the resulting appropriate equity split granted to PCS shareholders, and the increased commitment to the combined company exhibited by DT's extension of the lockup period, support for the merger is warranted," ISS said.

A shareholder vote on the merger has been rescheduled for April 24.

Shareholders P. Schoenfeld Asset Management LP and Paulson & Co. have also dropped their opposition to the deal in light of the new terms.

Shares closed at $11.02 and were unchanged after hours. The stock is up 17% over the past three months.

Write to Nathalie Tadena at [e-mail]

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