Verizon, the largest US telecommunications company, yesterday agreed to buy MCI, the long-distance carrier once known as WorldCom, for $6.7 billion (€5.2 billion) in cash and stock, after a weekend of frenzied negotiations.
The deal marks the end of MCI's year-long search for a buyer, which began shortly after the company emerged from bankruptcy under the leadership of Mr Michael Capellas.
Verizon, whose planned move will allow it to gain control of MCI's corporate customer base, edged out a competing offer from Qwest Communications.
Verizon's bid was slightly lower than Qwest's but MCI's board chose Verizon because it saw it as having more stable long-term prospects. Qwest is saddled with about $17 billion in debt.
The battle for control of MCI came amid a flurry of merger and acquisition activity in the US telecommunications industry.
SBC Communications last month agreed to buy AT&T, the largest US long-distance carrier, for about $16 billion.
Verizon's share price moved 1.2 per cent higher in morning trading to $36.76, signalling Wall Street approval.
The company said it expected the deal to reduce earnings in the first year, and not affect earnings by the third year.
MCI shares fell 4.8 per cent to $19.76. Qwest, which joins BellSouth and T-Mobile as the largest telecoms groups yet to have joined the recent wave of consolidation, lost 6.5 per cent to $3.88. - (Financial Times Service)
