Hedge Funds Win Better Deal In MetroPCS-T-Mobile Merger

Apr 12 2013 | 10:39am ET

Weeks after blasting Paulson & Co. and P. Shoenfeld Asset Management as "greedy hedge funds," T-Mobile is sweetening the pot for the two.

T-Mobile owner Deutsche Telekom's new offer to acquire MetroPCS Communications includes $3.8 billion less debt, and an agreement to hold the company for three times as long as originally planned.

While Paulson said it still needed to review the new proxy statement and P. Shoenfeld said "the revised transaction terms do not reflect all the improvements we were seeking," both hedge funds said they would likely back the new deal. Current MetroPCS shareholders will own 26% of the combined T-Mobile-MetroPCS.

Deutsche Telekom said it would remain an investor in the company for at least 18 months, and cut the interest rate on the lower debt by about a half percentage point.

Last month, T-Mobile CEO John Legere vowed that the merger would go forward, "despite the several greedy hedge funds that are trying to take a double dip out of that process." But the opposition of Paulson and P. Shoenfeld, who own a combined 12% of MetroPCS, appears to have worked: The New York Times reports that, had the vote on the original proxies gone forward today, success for T-Mobile was "mathematically impossible."

"We feel our central goal of making the combined PCS/T-Mobile company more competitive and valuable for all shareholders, including Deutsche Telekom, resulting in obtaining superior value for PCS shareholders and believe that these revised terms are the best available alternative for PCS shareholders at this time."

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