Hedge fund Paulson & Co., MetroPCS’s largest shareholder, said Thursday...
Hedge fund Paulson & Co., MetroPCS’s largest shareholder, said Thursday it will vote against the carrier’s proposed merger with T-Mobile USA when shareholders meet March 28. Paulson owns 9.9 percent of MetroPCS. “While we believe in the strategic merits of…
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the proposed combination, Paulson believes the pro forma company has too much debt at too high an interest rate to be competitive in the well-capitalized U.S. wireless industry,” Paulson Founder John Paulson said in a letter to the boards of MetroPCS and T-Mobile owner Deutsche Telekom. “We believe MetroPCS is worth more as a stand-alone company as it will be free to pursue its successful standalone strategy while examining opportunities for higher value strategic transactions.” The combined carrier would have $23.2 billion in debt, an “onerously large amount” in Paulson’s opinion. The fund also took issue with what it sees as an unfair equity split. MetroPCS would contribute 42 percent of the value of the combined carrier, but its shareholders will only receive a 26 percent ownership stake, Paulson said. The fund would support the deal if the terms are changed to lower the combined carrier’s debt by $6.6 billion and lower its interest rate to 4.2 percent, Paulson said. A MetroPCS spokeswoman said the carrier will continue to pursue the merger, which it believes is “in the best interests” of the carrier and its shareholders. MetroPCS CEO Roger Linquist said in a statement Tuesday that he believes the merger will result in a combined carrier that “will have the expanded scale, spectrum and financial resources to compete aggressively with the other larger U.S. wireless carriers."