In another big merger for the telecommunications industry, Verizon will acquire MCI for $5.3 billion.
The deal will be for $4.8 billion in equity and $488 million in cash.
“This is the right deal at the right time,” said Verizon Chairman and CEO Ivan Seidenberg. “We have been evaluating a transaction with MCI for some time, and now we have the opportunity to reach an agreement at the right price that works for both companies and at a time when MCI is gaining momentum. It is a natural and logical extension of Verizon’s strategy to transform our company to serve growth markets and offer broadband technologies.
MCI shareowners will receive 0.4062 shares of Verizon common stock for each common share of MCI. This is worth $4.795 billion and equivalent to $14.75 per MCI share, based on Verizon’s closing price on Friday, Feb. 11.
MCI shareowners will also receive $1.50 per MCI share in cash, worth $488 million. This consideration is subject to adjustment at closing and may be decreased based on MCI’s bankruptcy claims-related experience.
In addition, MCI will pay its shareowners quarterly and special dividends of $4.50 per share, worth $1.463 billion. This includes a 40-cent-per-share quarterly dividend approved by the MCI Board on Friday, Feb 11.
“With our heritage of innovation, global network and world-class Enterprise capabilities, MCI is the right partner for Verizon,” said Michael D. Capellas, MCI president and CEO. “Combined with Verizon’s financial strength and record of operational excellence, we will accelerate delivery of next-generation services, broaden our product portfolio and better serve our customers.”
In total, the transaction values MCI shares at $20.75 a share, or $6.746 billion.
Verizon will assume MCI’s net debt (total debt less cash on hand), targeted to be approximately $4 billion at closing, and customary closing conditions will apply.
In addition to MCI shareowner approval, the acquisition requires regulatory approvals, which the companies are targeting to obtain in about a year.
murdok | Breaking eBusiness News
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