Verizon Buys Block of MCI Stock

12 April 2005

US telecoms giant Verizon Communications has agreed to buy a 13.7% stake in long distance phone carrier MCI to nail its agreed takeover of the company.

It will pay MCI's largest stockholder, Mexican billionaire Carlos Slim Helu $1.1 billion (€774m, £584m) or $25.72 a share, in a deal that needs to be approved by regulators.

Verizon hopes the move will strike the decisive blow in its battle for MCI - once called Worldcom before it was hit by a fraud scandal last year - thereby finally burying the hopes of rival Qwest Communications'.

The two have been locked in a bidding war for nearly two months. Qwest has consistently come up with higher offers which have been knocked back in favour of Verizon.

The MCI board believes the US number one telecoms company, valued at around $99bn, offers better long-term term financial stability. Qwest, in contrast, is valued at around $6.8bn and is saddled with debt of $17bn.

The deal agreed between Verizon and MCI is worth $7.5bn, or $23.10 a share. The most recent offer from Qwest was $8.9bn.

Says Qwest of Verizon's latest move: "By entering into its deal with Mr Slim, Verizon has both created two classes of shareholders and called into question the MCI board's previous determination that Verizon's lower offer to the other MCI shareholders was superior and fair."

Data sourced from The Times Online (UK); additional content by WARC staff