Verizon buys MCI for $6.7B
By Bruce Meyerson
Associated Press
NEW YORK — Verizon Communications Inc. has won the bidding to acquire MCI Corp., a swift response to the buyout of rival AT&T Corp. by SBC Communications Inc. and the third big telephone industry merger in two months, The Associated Press learned early today.
The agreement, scuttling a rival bid by Qwest Communications International Inc., was expected to be announced this morning, according to a source familiar with the matter who spoke on condition of anonymity.
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The purchase price of about $6.7 billion, below what Qwest apparently offered, was approved by the boards of directors at both Verizon and MCI after a busy weekend of negotiations, the source said.
The sudden rash of interest in MCI, which recently changed its name from WorldCom Inc. after suffering bankruptcy and accusations of fraud, was set off by the $16 billion deal reached two weeks ago between AT&T and SBC, a top rival for both Verizon and Qwest.
Verizon, the dominant local phone company in the Northeast and a top cellular player, likely won MCI's favor because it is larger and in better financial shape than Qwest, the local phone carrier across the more sparsely populated Rocky Mountains and Pacific Northwest.
MCI investors are said to have reacted poorly to the prospect of being paid with shares of stock in Qwest, a company marred by its own accounting scandals and a more questionable future.
The buyout marks an abrupt change of direction for Verizon, which two weeks ago dismissed the notion it needed to respond to either an SBC-AT&T deal or the merger agreement between Sprint Corp. and Nextel Communications Inc. in December.
