Sweetened Offer in the Works for MetroPCS?

April 10, 2013 by Paul Ausick

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Ahead of the shareholders meeting schedule for this Friday, MetroPCS Communications Inc. (NYSE: PCS) may be getting an improved offer from Deutsche Telekom AG for the proposed merger with DT’s T-Mobile USA subsidiary. The existing deal calls for DT to pay $1.5 billion in cash (about $4 per MetroPCS share) and 26% of a merged company that will begin its life with a debt load of $15 billion courtesy of DT.

Bloomberg is citing unnamed sources who say that DT is monitoring the votes ahead of MetroPCS’s shareholders meeting and is considering sweetening the existing offer in advance of the meeting.

One thing DT is surely considering is reducing the amount of debt the merged company will be forced to shoulder. Competing against well-capitalized players like Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) will not be easy with the millstone of so much debt.

Adding more cash to the deal or increasing MetroPCS shareholders’ stake in the merged company are still possible, but DT will probably want to hold one or both of those options in reserve because they could end up costing the German firm more than a reduction in debt.

If DT does make a new offer, the MetroPCS shareholders meeting will have to be rescheduled.

Shares of MetroPCS are up 4% at $11.64 in a 52-week range of $5.53 to $14.51.