MCI Communications
Corp. agreed Monday to
be acquired by
WorldCom Inc., after
the upstart
telecommunications
company raised its takeover bid for MCI
to $37 billion in stock and cash. It would
be the largest corporate merger in history.
MCI WorldCom is expected to have more than $30 billion in sales
next year, a joint statement said. The business combination
should boost WorldCom's earnings by more than 20 percent in the
first year after the deal closes, it added.
The new offer, raised to $51 a share from $41.50, will be paid in
WorldCom stock to all shareholders other than British
Telecommunications Plc., which holds a 20 percent stake in MCI
and will receive $7.4 billion in cash, Reuters reported.
The deal, which topped a competing $28 billion bid made by GTE
Corp., has been approved by the directors of both companies, MCI
and WorldCom said in a news release.
With British Telecommunications cashed out, MCI shareholders
would own about 45 percent of the new company, while WorldCom
would have a 55 percent stake. MCI Chairman Bert Roberts will
become chairman of the new company, which will be called MCI
WorldCom, and Bernard Ebbers, chief executive of WorldCom,
will become CEO of the new company.
MCI's board voted to accept WorldCom's deal Sunday night after
WorldCom sweetened its offer by about 20 percent, ending a
takeover battle for the nation's second-largest
telecommunications company, The Associated Press said.
WorldCom's bid leapfrogged a competing $28 billion all-cash offer
from GTE Corp. and also beat out a $24 billion merger agreement
MCI had with British Telecommunications PLC.
British Telecom will be paid $465 million because MCI broke its
previous contract to merge with BT.
WorldCom, the No. 4 long-distance phone company, also will
assume $5 billion in MCI debt.
The deal would eclipse the largest U.S. merger so far, a $25.6
billion marriage between Bell Atlantic Corp. and Nynex Corp. that
was completed in August.