While the biggest proxy advisory firm around may have recommended that shareholders reject MetroPCS‘ planned merger with T-Mobile USA, the cellphone service provider hasn’t lost hope yet. Another firm is on board with the deal.
MetroPCS said on Thursday that the transaction had won the blessing of Egan-Jones, a consolation prize of sorts after Institutional Shareholder Services criticized the T-Mobile merger as not in the best interests of shareholders.
Another proxy advisory firm, Glass Lewis, is expected to make its recommendation soon.
Announced last year, the union would create one of the biggest low-cost cellphone service providers in the country and provide more competition for the likes of Sprint Nextel. MetroPCS has argued that the deal would help provide it with necessary spectrum, the radio pathways that gird wireless data transmissions.
“While we are disappointed in ISS’ report, we are gratified that Egan Jones’ recommendation supports our belief that this proposed combination is the best strategic alternative for the company and its stockholders and will maximize value for MetroPCS’ stockholders,†the company said in a statement
I.S.S.’ report, published Wednesday night, sided firmly with arguments made by vocal opponents of the telecom merger. They include two hedge funds, Paulson & Company and P. Schoenfeld Asset Management, that together own over 12 percent of MetroPCS’ stock.
Among the chief objections to the current deal are the high level of debt that the combined company would owe, as well as what the dissident investors argue are too-high interest rates. The shareholders also contended that MetroPCS shareholders should own more than the 26 percent of the merged entity that the deal currently proposes.
Shares of MetroPCS climbed nearly 4 percent by midday on Thursday after I.S.S. published its report, trading at $10.92.
In its response on Thursday, MetroPCS argued that it had carefully considered alternatives to the T-Mobile deal and reiterated that shareholders would be better off agreeing to the merger than risking the company faltering as an independent concern.
“Although we are pleased that I.S.S. recognizes the thoroughness of the process undertaken by the MetroPCS board of directors, we strongly believe that I.S.S.’ report contains material flaws and reaches the wrong conclusion,†MetroPCS said.
A vote on the deal is scheduled for April 12.
