[Techtaffy Newsdesk]

Deutsche Telekom and MetroPCS Communications have signed a definitive agreement to combine T-Mobile USA and MetroPCS. The combined company, which will retain the T-Mobile name.

Deutsche Telekom’s supervisory board and MetroPCS’ board of directors have unanimously approved the transaction. The transaction is structured as a recapitalization, in which MetroPCS will declare a 1 for 2 reverse stock split, make a cash payment of $1.5 billion to its shareholders (approximately $4.09 per share prior to the reverse stock split) and acquire all of T-Mobile’s capital stock by issuing to Deutsche Telekom 74% of MetroPCS’ common stock on a pro forma basis.

Deutsche Telekom has also agreed to roll its existing intercompany debt into new $15 billion senior unsecured notes of the combined company, provide the combined company with a $500 million unsecured revolving credit facility and provide a $5.5 billion backstop commitment for certain MetroPCS third-party financing transactions.

Upon consummation of the transaction, the combined company is expected to continue trading on the New York Stock Exchange. John Legere, currently president and CEO of T-Mobile, will serve as president and CEO of the new company and J. Braxton Carter, currently CFO and vice chairman of MetroPCS, will be the CFO.  The company will operate T-Mobile and MetroPCS as separate customer units, led by Jim Alling, currently chief operating officer of T-Mobile, and Thomas Keys, currently president and COO of MetroPCS, respectively.

After closing, the company’s headquarters will be in Bellevue, Washington and it will retain a significant presence in Dallas, Texas.  The combined company will have an 11-member board of directors, including a number of members appointed by Deutsche Telekom consistent with its equity ownership.

Morgan Stanley acted as lead financial advisor and issued a fairness opinion to the supervisory board of Deutsche Telekom.  Lazard acted as financial advisor to Deutsche Telekom.  Wachtell, Lipton, Rosen & Katz, Cleary Gottlieb Steen & Hamilton, K&L Gates, and Wiley Rein are serving as legal counsel to T-Mobile and Deutsche Telekom.

J.P. Morgan acted as lead financial advisor to MetroPCS and also advised MetroPCS with regard to post transaction capital structure.  Credit Suisse Securities (USA) also acted as a financial advisor to MetroPCS.  Evercore Partners acted as financial advisor to the special committee of the board of directors of MetroPCS and issued a fairness opinion.  Gibson, Dunn & Crutcher, Paul Hastings and Telecommunications Law Professionals are serving as legal counsel to MetroPCS.  Akin Gump and Fulbright & Jaworski served as counsel to MetroPCS’ special committee.

Upload: 11-16-12