MetroPCS Shareholders Revolt Over T-Mobile Buyout Rumors

The rumored acquisition of US Regional wireless carrier MetroPCS by T-Mobile USA has hit a major snag — MetroPCS shareholders.

According to TMO News, a lawsuit filed in Dallas, Texas claims that the merger is structured in such a way that it “cheats shareholders” through a “drastically undervalued” merger attempt.

Under terms of the deal, MetroPCS would be required to declare a 1-for-2 reverse stock split and makes a $1.5 billion cash payment to its shareholders, or $4.09 a share. After that point, the company would issue 75 percent of the remaining common stock to Deutsche Telekom. MetroPCS shareholders would continue to hold 26 percent of the newly combined company.

The new company shares would be valued at $12.48 per share.

The complaint reads:

“The process leading to the proposed acquisition was tainted by conflicts, tilted towards T-Mobile and driven entirely by the board and company management, who together control 15.4 percent of PCS’ outstanding stock and seek liquidity for their illiquid holdings.”

The plaintiffs add:

“[Metro]PCS’ officers and directors will receive millions of dollars in special payments – not being made to ordinary shareholders – for currently unvested stock options, performance units and restricted shares, all of which shall, upon the merger’s closing, become fully vested and exercisable.”

While shares are down at MetroPCS, the company traded at $18.69 per share in May 2011, and a recent analyst report believes company shares will soon climb back to $18.00 per share.

Shareholder also argue that T-Mobile USA owner Deutsche Telekom has structured the deal in such a way that competing bids are being discouraged.