NEW YORK (AP) -- Investors cooled Thursday to T-Mobile USA's proposed acquisition of smaller rival MetroPCS, pulling down stock prices for both companies and previous MetroPCS suitor Sprint.
Shares of MetroPCS Communications Inc. plunged 10 percent in morning trading, then recovered somewhat as Bloomberg reported that Sprint Nextel Corp. was mulling a counterbid to T-Mobile's offer, revealed Wednesday.
In noon trading, shares of Dallas-based MetroPCS fell 23 cents, or 1.9 percent, at $12.01. The shares have still gained about 4 percent since news of the deal emerged Tuesday.
Shares of Deutsche Telekom AG, the German parent company of T-Mobile USA, fell 3.7 percent in European trading, and have fallen on the deal, overall.
Under the deal, T-Mobile USA and MetroPCS would be rolled into one company. MetroPCS shareholders would get $1.5 billion in cash and about 26 percent of the shares.
The deal isn't a cure for T-Mobile's persistent of loss of subscribers, and integrating MetroPCS, which has a network that doesn't work with T-Mobile phones, will be costly, said Nomura Securities analyst Mike McCormack. He cut his rating on MetroPCS shares from "Neutral" to "Reduce" on Thursday.
Kevin Smithen at Macquarie Capital had a similar take, saying, "You can't make soup with two leaky pots." The forecasts provided by T-Mobile and MetroPCS management on Wednesday were too optimistic, he said.
Sprint shares fell 21 cents, or 3 percent, in afternoon trading. A spokesman said the company was not commenting on Bloomberg's report that it was considering a bid. Sprint was widely reported to have looked at buying MetroPCS earlier this year, but the deal was shot down by a board that's cautious after Sprint's massive problems integrating Nextel, which it bought in 2005.
Shares of Leap Wireless International Inc., which has a business model that is similar to MetroPCS, fell 36 cents, or 5.8 percent, to $5.87. The stock initially jumped on news of the deal, as investors speculated that it might be another takeover target, but investors have refocused on Leap's gloomy prospects as a standalone company. Its shares are down 28 percent from Tuesday's peak of $8.16. That had been its highest price since April.