Confirmed Merger Talks Between T-Mobile and MetroPCS Create Issues

What investors need to be concerned with here is that in some cases this could end up being similar to a reverse merger whereby T-Mobile would be the surviving company and the “PCS” stock as it exists today would suddenly become a much larger company than the $5 billion market cap it has after today’s rally.

We have also been critical here that any acquirer has now allowed MetroPCS shares to rally literally more than 100% from the lows over the summer. Another issue is that MetroPCS was supposed to be an acquisition target of Sprint Nextel Corporation (NYSE: S) but the Sprint board of directors reportedly blocked that.

Sprint shares are down 5.5% at $4.89 on the chances that MetroPCS will be gobbled up by another player besides it. In reality, Sprint needs to focus on its own continued recovery. Leap Wireless International Inc. (NASDAQ: LEAP), the direct competitor of MetroPCS and a failed merger partner with MetroPCS, is seeing its shares up 13% at $7.92.

JON C. OGG