Is T-Mobile/MetroPCS Really a Done Deal?

Last February, the Sprint Nextel (NYS: S) board of directors nixed CEO Dan Hesse's under-the-radar plan to buy up MetroPCS (NYS: PCS) . Why? Because the board apparently wasn't happy about being brought into the negotiations so late in the process, and because the reported $8 billion (including debt) price tag was needed for Sprint's 4G LTE network build-out.

Non-buyer's remorse
But last week's announced merger of T-Mobile with MetroPCS has Sprint second-guessing its decision to abort that deal. Bloomberg has reported that several people in the know say that Sprint is now seriously considering making a counteroffer for MetroPCS. The very real threat of losing out on gaining enough new subscribers to seriously challenge mobile-market leaders Verizon (NYS: VZ) and AT&T (NYS: T) could push No. 3 mobile carrier Sprint into the acquisition fray.

Sprint is in a better position now
Sprint's share price has doubled since it last considered buying MetroPCS, so any merger deal offering Sprint shares as a partial payment would carry that much more weight. This also gives Sprint a chance to offer MetroPCS a much less complexly structured deal than is offered by T-Mobile.

The T-Mobile/MetroPCS deal is really a reverse IPO, where a privately held company, by merging with a publicly held company, can become publicly traded also. This way DeutscheTelekom, the parent company of T-Mobile, can unload T-Mobile -- something it has been wanting to do -- bit by bit on the New York Stock Exchange without having to face double scrutiny from the Federal Communications Commission and the Department of Justice.

What's Revlon got to do with this?
Thanks a 1985 Delaware decision -- Delaware is the state in which MetroPCS is incorporated -- regarding a Revlon takeover battle, the MetroPCS board must work to get the highest reasonable price possible if it wants to sell the company. That could give Sprint the opening it would need if it does indeed decide to make another play for MetroPCS.

However, just as AT&T had to pay a hefty fee to T-Mobile after their merger failed to pass regulatory muster last year, there would also be a price tag on this deal's failing: $150 million from MetroPCS if it reneges, $250 million from T-Mobile if it gets cold feet. But those fees may turn out to be small potatoes in the greater scheme of things.

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Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool has a disclosure policy.
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