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MetroPCS shareholders have filed a lawsuit attempting to block the company’s merger with T-Mobile USA, claiming that MetroPCS’s board members are simply trying to line their own pockets.
According to the TMONews blog, the shareholders believe the merger is ‘drastically undervalued’ and will give unacceptable special payments to senior management.
“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,” the lawsuit reads.
“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.”
The lawsuit cites corporate waste, gross mismanagement, unjust enrichment and a breach of fiduciary duty.
The shareholders claim that the deal was structured in such a way as to make sure that T-Mobile parent company Deutsche Telekom would be the only bidder. Indeed, MetroPCS was barred from giving detailed information to other bidders except in the most limited circumstances, they say.
The deal was reached earlier this month, but still requires approval from the Federal Communications Commission and the Department of Justice. If approved, the merger should be completed by the middle of next year. It’s likely to get the go-ahead, as it will improve rather than inhibit competition.