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Last Updated: Monday, 14 February, 2005, 12:12 GMT
Verizon wins MCI with $6.75bn bid
MCI logo
MCI could be about to change its name yet again
US telecoms giant Verizon has won a takeover battle for phone firm MCI with a bid worth $6.75bn (3.6bn) in cash, shares and dividends.

The two firms sealed the deal on Monday despite what was thought to be a higher offer from rival US carrier Qwest.

The US telecoms market is consolidating fast, with former long-distance giant AT&T being bought by former subsidiary SBC earlier this year for $16bn.

MCI exited bankruptcy in April, having gone bust under previous name WorldCom.

The bankruptcy followed its admission in 2002 that it illegally booked expenses and inflated profits.

MCI AND VERIZON
MCI
Staff: 41,000
Sales: $15.7bn
Loss: $3.9bn (Jan-Sep 2004)
Market value: $6.6bn
Customers: 15 million individuals and businesses
Verizon
Staff: 210,000
Sales: $71.3bn
Profit : $7.8bn (2004)
Market value: $100.6bn
Customers: 53 million fixed lines, 2.4 million businesses, 18 million long-distance, 3.6 million DSL, 44 million wireless
Shareholders lost about $180bn when the company collapsed, while 20,000 workers lost their jobs.

Former Worldcom boss Bernie Ebbers is currently on trial, accused of overseeing an $11bn fraud.

Qwest has itself come under suspicion of sub-standard behaviour, paying the Securities and Exchange Commission $250m in October to settle charges that it manipulated its results to keep Wall Street happy.

Shake-up

MCI is the US's second-biggest long distance firm after AT&T.

Verizon is swapping 0.41 of its shares and $1.50 in cash for each MCI share, as well as offering special dividends of $4.50 a share, for a total value of about $6.75bn.

Both boards are backing the deal, but regulators will still need to give their approval.

The takeover is the fifth billion-dollar telecoms deal since October.

Consolidation in the US telecommunications industry has picked up in the past few months as companies look to cut costs and boost client bases.

Last week, SBC Communications agreed to buy its former parent and phone trailblazer AT&T for about $16bn.

Buying MCI would give Verizon access to MCI's global network and business-based subscribers.

The rationale is similar to the one underpinning SBC's AT&T deal.

Verizon is far bigger than Qwest, is much less indebted and has its own successful mobile arm - factors which may have swung the board in its favour.





SEE ALSO:
MCI shares climb on takeover bid
03 Feb 05 |  Business
SBC agrees to buy AT&T for $16bn
31 Jan 05 |  Business
US mobile groups confirm merger
15 Dec 04 |  Business
Qwest settles SEC fraud inquiry
21 Oct 04 |  Business
MCI out of Chapter 11 bankruptcy
20 Apr 04 |  Business
Trouble looms for MCI sell-off
16 Mar 04 |  Business


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