MetroPCS and Deutsche Telekom Cement Deal and 4 Heavily Traded Shares Not to Ignore

Hewlett-Packard Company (NYSE:HPQ): In a press release intended to coincide with its Analyst Meeting, Hewlett-Packard stated, “The company is positioned to extend its leadership into the major trends driving IT investment — cloud computing, information optimization and data security. In May, HP initiated a multiyear restructuring designed to realign its cost structure and create investment capacity to drive innovation against its strategic priorities, strengthen market leadership and rebuild its balance sheet while returning capital to shareholders. Despite the challenging environment, the company has maintained research and development (R&D) spending, along with a steady focus on preserving the long-term health of the business. The company is on track to deliver on its savings targets and complete the restructuring by the end of fiscal 2014.”

Bank of America Corp (NYSE:BAC): Traders and analysts have begun to leave big banks and are joining asset managers and other financial companies that are not so strict regarding risk-taking, according to the Financial Times.

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Sprint Nextel Corporation (NYSE:S): Yesterday, there was strange options activity in Sprint Nextel, as one trader bought 107,000 January 2014 7-strike calls for $0.63, and paid a total of $6.7 million in premium. This was purchased as Sprint’s stock saw a drop of more than 5 percent due to news that Deutsche Telekom would complete a deal with MetroPCS  likely to bolster the German company’s T-Mobile USA division. The deal was made official this morning.

MetroPCS Communications Inc (NYSE:PCS) and Deutsche Telekom (DTEGY) signed a definitive agreement for the combination of T-Mobile USA and MetroPCS. The combined company, which is to keep the T-Mobile name, will posses the large scale, spectrum and financial resources to allow it to be a true competitor with the other national U.S. wireless carriers. The transaction has been approved by Deutsche Telekom’s supervisory board and MetroPCS’ board of directors. The transaction is structured as a recapitalization, in which MetroPCS is to declare a 1 for 2 reverse stock split, make a cash payment of $1.5 billion to shareholders, along with the acquisition of all T-Mobile capital stock via the issuance to Deutsche Telekom of 74 percent of MetroPCS’ common stock on a pro forma basis. Additionally, Deutsche Telekom has made an agreement to roll its existing intercompany debt into new $15 billion senior unsecured notes of the combined company, which gives the combined company a $500 million unsecured revolving credit facility and provides a $5.5 billion backstop commitment for particular MetroPCS third-party financing transactions. Analyst consensus estimates for 2012 suggest that the combined company could have nearly 42.5 million subscribers, $24.8 billion worth of revenue, $6.3 billion of adjusted EBITDA, $4.2 billion of capital expenditures, and $2.1 billion of free cash flow during 2012.

Sirius XM Radio Inc (NASDAQ:SIRI): The FCC called for public comment regarding Liberty Media Corp.’s application to be approved to take full control of Sirius XM Radio, which signifies that the agency is continuing with its evaluation of the application, according to the Wall Street Journal.

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