NEW YORK (Reuters) - Proxy adviser Glass Lewis on Friday, the second firm to suggest that MetroPCS Communications Inc. shareholders vote against its proposed merger with T-Mobile U.S. became, add pressure on Deutsche Telekom AG a sweeter deal to offer.
The advisory committee follows a recommendation by a larger proxy firm ISS late on Wednesday night that shareholders should vote against the deal with T-Mobile USA, the U.S. business of Deutsche Telekom. A smaller advisory firm Egan Jones has recommended that its clients vote in favor of the transaction.
Glass Lewis said in a report released late Thursday that the proposed transaction undervalues, MetroPCS's contribution to the combined company, adding that it probably believe MetroPCS shareholders can realize more value in the short term if the company remained independent.
Glass Lewis also said that if MetroPCS shareholders vote against the transaction, they can potentially receive a better offer.
'A MetroPCS spokesman, said in an e-mail statement that the board remains committed to the transaction and believe it is in the best interest of shareholders.
Analysts said on Thursday that ISS siding with the shareholder activists would likely force Deutsche Telekom to improve the terms of the transaction. ISS has complained about the negative market reaction to the proposed transaction, a lower valuation than justified and MetroPCS's potential to be successful as an independent company.
Paulson & Co., the largest MetroPCS shareholder, and P. Schoenfeld Asset Management, another large shareholder, both have committed to vote against the deal on concerns about the valuation and the amount of the debt is assigned to the combined company.
Similarly, another major shareholder - Madison Dearborn - his support behind the deal.
T-Mobile USA, the No.. 4 U.S. mobile provider, and its smaller rival MetroPCS would pool their spectrum resources and networks in order to better compete with larger rivals Verizon Wireless, AT & T Inc. and Sprint Nextel.
Under the terms of the reverse merger announced in October, Deutsche Telekom would end up with a 74% stake in the combined company, and MetroPCS would be a one-for-two reverse stock split declared and paid $ 1 5 billion in cash to its shareholders.
If the deal collapses, it would be a big blow to Deutsche Telekom in 2011 after they were forced to abandon its plan to buy T-Mobile USA AT & T to sell for $ 39 billion, due to opposition by regulators .
On top of these issues, the companies expect to soon tougher competition from an emboldened Sprint, which agreed to sell 70 percent of its shares to Japan's SoftBank Corp. for $ 20 billion in face to face.
P. Schoenfeld Asset Management LP, which says it owns about 2.5 percent of the MetroPCS is leading a proxy fight against the deal. Paulson & Co. has a 9.9% stake, and Madison Dearborn approximately 8.3 percent of MetroPCS shares, according to the most recent public disclosures.
MetroPCS shares slid more than 8 percent since October 1, 2012, the day before reports emerged that MetroPCS and Deutsche Telekom was in talks.
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