PCS management screwed this one up big time. That said, PCS shares look grossly undervalued to me. PCS shareholders are getting $4 in cash, which is 36% of the current share value of PCS. They are then left with 25% interest in a significant mobile communications company. I have read analyses here indicating that those shares are worth $16 per share.
1, PCS was heavily owned by the risk arbitrage investor community. These investors want to get cashed out or at least taken over by a company with a listed stock so that they can go short the acquirer to lock in their gains. This deal does neither of those things. Investors do get $4 in cash, but they also get shares in a yet to be formed company that can not be shorted.
2. The deal does not close until sometime in 2013. For many, that is too long a time to wait. So they are selling now.
3. Investors who own PCS now really own $4 in cash and 25% of T Mobile. There may be a bunch of people that simply do not want T Mobile stock.
4. PCS in effect becomes "dead money" as all the details of the merger come out and investors have to look at T-Mobiles financials to see what they are getting.
I think that PCS management should have sold the company outright. Investors could have gotten Deutsche Telecom stock (parent of T-Mobile) and some cash.
That said, T-Mobile is probably a decent investment here. Shareholders simply have to wait through this short period of adjustment by the arbitrage community.