T-Mobile’s proposed merger with MetroPCS was handed another blow this morning as the last major proxy advisory firm recommended against the deal. In its findings, Glass Lewis & Co found the proposed deal lacked in several significant ways, including how MetroPCS agreed to the deal and the compensation shareholders would receive.
Glass Lewis joins Institutional Shareholder Services in advising shareholders to vote against the proposed deal. Both advisory groups have sided with Paulson & Company and P. Schoenfeld Management in calling for shareholders to demand better terms or walk away.
The combination of both groups advising against the deal is likely to have an impact on undecided voters who were as-of-yet-undecided on their vote. The pressure is now firmly on Deutsche Telekom and MetroPCS to consider raising the terms of the deal or risking defeat during the April 12th shareholder vote. ISS and Glass Lewis are the two biggest players in the field of proxy advisor firms and while their influence has lessened in recent years, their recommendation can still influence the outcome of a deal.
The New York Times reports Deutsche Telekom is weighing whether it should offer better terms or walk away from the deal according to “people briefed on the matter.” Glass Lewis did acknowledge the upsides to the T-Mobile deal including taking MetroPCS from a regional player to a nationwide carrier, but showed concern MetroPCS didn’t pursue other options before settling on the T-Mobile deal.
“As constructed, the agreement appears to undervalue MetroPCS’ contribution to the combined company and offers shareholders a merger consideration that does not fairly value MetroPCS in a takeover by Deutsche Telekom,” Glass Lewis wrote in its report.
The question we’re now forced to ask is just how Deutsche Telekom and MetroPCS will respond to these advisory findings?