MetroPCS shareholders file suit over T-Mobile deal, call it ‘drastically undervalued’

Big mergers usually bring out the lawyers, and so it’s not a surprise that one of the highest-profile wireless transactions of the year is sparking litigation.

According to TmoNews, MetroPCS shareholders have filed derivative lawsuits against T-Mobile USA, Deutsche Telekom and MetroPCS over the proposed merger. The suits mark the latest round of scrutiny of the tie-up, which has been the subject of criticism since the deal was first announced.

In the suits, filed in Dallas County, plaintiffs say that the merger drastically undervalues MetroPCS. They also allege that executives and directors of MetroPCS will get special payments for unvested stock options not available to ordinary shareholders.

The complaint notes:

“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.”

Opposing Views has more details on the suit, noting that the plaintiffs are suing over breach of fiduciary duty, abuse of control, gross mismanagement, unjust enrichment and corporate waste.

T-Mobile and MetroPCS announced their proposed merger on October 3rd, though it has yet to meet regulatory approvals. Together, the fourth and fifth largest wireless carriers would have a combined subscriber base of 42.5 million

MetroPCS shareholders are expected to get $1.5 billion in cash and 26 percent total ownership of the new T-Mobile. The suits come to light on the same day that Softbank announced that it is paying $20.1 billion for a 70 percent stake in Sprint, another big deal that’s likely to alter the wireless landscape.