Monday, March 28, 2005

MCI Accepts Sweeten Bid from Verizon

MCI's Board of Directors accepted a revised $7.6 billion acquisition offer from Verizon. The new bid from Verizon was nearly $1 billion greater than its previous offer but still under the $8.45 billion offer from Qwest Communications.

Under the revised proposal, MCI may be required to pay Verizon a termination fee in the event the agreement is terminated. Under specified circumstances, this termination fee has been increased to $240 million from $200 million and reimbursement to Verizon for its expenses up to $10 million.

In making its determination, MCI said its Board considered the following factors, among others: the changing competitive nature of the telecommunications industry; increasing need for scale and comprehensive wireless capabilities; access economics; the level and achievability of synergies; strength of capital structure; the ongoing ability to sustain network service quality and invest in new capabilities; and ensuring ongoing customer confidence among MCI's large enterprise and government customers.

In a statement, Qwest said "We respect the right of Verizon to change the composition and value of their bid, but we still believe our proposal creates superior value for shareowners. We are going to assess the situation and determine what is in the best interests of shareowners, customers and employees."

  • MCI traces its lineage to Microwave Communications of America Inc., which was founded by Jack Goeken in 1963. In 1968, the company was joined by Bill McGowan, who led the regulatory fight to challenge AT&T in long distance communications.


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