German wireless carrier Deutsche Telekom sweetened a bid by its T-Mobile USA unit for MetroPCS on Wednesday after shareholders of the target company resisted the original offer.
Deutsch Telekom proposed reducing the merged companies’ debt by about $3.8 billion and the interest rate by half a percentage point, the Wall Street Journal reported. The company also agreed to extend a lockup period in which it could not sell shares in the merged cellphone service provider to 18 months from 6 months.
The move will essentially improve the overall value of the merged entity’s equity. Deutsche Telekom estimates that the lower debt and interest rate will add almost $3 a share in additional value for MetroPCS shareholders. Current terms call for shareholders to receive $4.09 per share and a 26 percent stake in the merger.
Among those shareholders are hedge funds Paulson & Company and P. Schoenfeld Asset Management, who have called for improvements to the original offer.
Deutsche Telekom said that its latest proposal was “best and final.” A vote on the deal, which had been set for Friday, has been rescheduled to April 24. P. Schoenfeld said in a statement that it was pleased by the new offer, though it is currently reviewing its terms.
T-Mobile in the U.S. is rebranding itself as the “non-carrier” by eliminating users’ contract obligations. It is offering monthly rates based on usage, and has eliminated subsidies on cell phone purchases. Users can pay for their devise over time.
