Super Lawyers
The top Attorneys in Virginia and
the Washington, D.C. metropolitan
area, only 5% of the attorneys
in the state are named in SuperLawyers
ATA NBTA | The National Board of Trial Advocacy Association of Trial Lawyers of America Virginia Trial Lawyers Association National Asociation of Distinguished Counsel | Nation's Top One Percent | NADC

T-Mobile merger faces shareholder litigation

The proposed merger between T-Mobile and MetroPCS is facing challenges from shareholders who are unhappy with the deal between the two companies.

The shareholders are pursuing two derivative complaints, which means that they are basing their injury on the injury that the merger is causing to the two companies. Shareholder derivative suits are brought by the shareholder on behalf of the company itself in situation in which the shareholder believes a principle in the company is acting against the company's best interest.

In this case, the litigation is over whether T-Mobile and MetroPCS shares have been undervalued for purposes of the merger, causing harm to the corporations and their shareholders. Part of the problem is that the merger will result in a reverse stock split for MetroPCS shareholders, meaning that two shares will become one, and the company will pay shareholders a certain amount of money for the transition. That amount is currently a little over four dollars, which shareholders say is intentionally undervalued. Another issue is that MetroPCS shareholders believe that the deal was crafted so that it would not be appealing to any other buyer except for T-Mobile, even though it was allegedly an open bidding process.

The shareholders are seeking an injunction, which means that they want to put the merger on hold or stop it completely.

This type of litigation is unfortunately not uncommon for mergers or acquisitions involving large, publicly held companies. It can be difficult for shareholders, executives, and the directors of a company to agree on the right direction for the company.

Source: Courthouse News Service, "Shareholders Fight Metro PCS T-Mobile Merger," David Lee, Oct. 12, 2012.

No Comments

Leave a comment
Comment Information

DISCLAIMER: This website is designed to provide only general information; nothing contained herein constitutes legal advice nor is it an offer of legal representation. Use of this website is not intended in any way to create or convey the impression that such use of the website by any person, organization, or entity of any nature and/or kind constitutes any attorney-client relationship whatsoever and any information provided in this website shall not constitute legal advice. The use of any electronic communication available through this website with the Law Office of Richard L. Downey or any person associated with this website shall not constitute attorney-client relationship nor will any communication received by the Law Office of Richard L. Downey constitute an attorney-client communication. The Law Office of Richard L. Downey cannot make any guarantees as to the accuracy or currency of any information contained in or created in this website or the use of any link to another website contained in this website. The information that you obtain at this website is not, nor is it intended to be legal advice. You should consult a lawyer for individual advice concerning your own particular situation.

*The National Board of Trial Advocacy is accredited by the American Bar Association. Currently there is no procedure in the Commonwealth of Virginia for approving certifying organizations.