T-Mobile Merger With MetroPCS Gets Boost

     DALLAS (CN) - T-Mobile and MetroPCS, the nation's fourth- and fifth-largest wireless phone service providers, say a judge should let advance their $1.5 billion merger.
     The companies announced their combination on Oct. 3, creating "the leading value carrier in the U.S. wireless marketplace, which will deliver an enhanced customer experience through a wider selection of affordable products and services, deeper network coverage and a clear-cut technology path to one common LTE network."
     MetroPCS shareholders responding by suing both carriers, T-Mobile parent Deutsche Telekom, MetroPCS CEO Roger Linquist and its board members.
     The complaint in Dallas County Court argued that the merger unfairly benefits the board.
     Judge D'Metria Benson granted a temporary restraining order, leading the companies to petition for a writ of mandamus on Monday with the Fifth District of Texas Court of Appeals. They say MetroPCS corporate bylaws require the lawsuit be filed Delaware.
     "The trial court clearly abused its discretion by issuing the TRO order and setting a temporary injunction hearing despite relators' motion to dismiss based on a mandatory exclusive forum selection provision in the lawfully and duly adopted MetroPCS bylaws," the petition states. "The Texas Supreme Court held that '[m]andamus relief is available to enforce forum-selection clauses' to require dismissal and overturn an injunction order in markedly similar circumstances."
     They claim that it was an abuse of discretion for Benson to refuse ruling on a motion for a stay until after ruling on their motion to dismiss.
     The Fifth Court of Appeals stayed the restraining order Tuesday afternoon in response to a different motion that the companies filed with it a day earlier.
     Next it must decide whether Benson improperly granted the TRO without any verified facts, affidavit evidence or any other evidence, as the companies claim.
     "Here, real party did not present any verified facts, affidavits or other evidence in support of the TRO order other than an affidavit authenticating the Business Combination Agreement and terms of that one agreement," the companies say.
     Benson reached past the agreement by finding that "harm is imminent," that "plaintiffs will be irreparably injured," and that the "poison pill" and "force the vote" provisions "eliminate potential acquirers from making a competitive and superior bid" for MetroPCS, according to their petition.
     "No evidence exists in the record to support these findings - and the trial court did not have discretion to find them without any evidence," they added. "Importantly, no evidence exists that any 'potential acquirer' exists who might make a 'competitive and superior bid for [Metro ]PCS' - as found by the trial court in the TRO order - or that any terms of any agreement might dissuade any person orentity from making a superior proposal."
     Shareholders say the $12.48 per share valuation is too low, that shares traded as high as $18.69 per share in May 2011 and that a stock analyst has set an $18.00 per share price target on the stock. They claim the board of directors is "conflicted and serving its own financial interests," and that senior management will get millions of dollars in change-of-control payments.
     "The process leading to the proposed acquisition was tainted by conflicts, tilted towards T-Mobile and driven entirely by the board and company management, who together control 15.4 percent of PCS' outstanding stock and seek liquidity for their illiquid holdings," according to the complaints.
     "[Metro]PCS' officers and directors will receive millions of dollars in special payments - not being made to ordinary shareholders - for currently unvested stock options, performance units and restricted shares, all of which shall, upon the merger's closing, become fully vested and exercisable."
     Under the merger, MetroPCS will declare a one-for-two share reverse stock split and make a $1.5 billion cash payment to shareholders, or $4.09 per share. It will then issue 74 percent of common stock to Deutsche Telekom and the plaintiff shareholders will own the remaining 26 percent of the combined company, valuing their shares at $12.48 per share, according to the complaint.