Microsoft Chairman and Chief Software Architect Bill Gates speaks before the Society of American Business Editors and Writers, at their annual conference being held in Seattle, yesterday. - REUTERS
REUTERS:
VERIZON COMMUNICATIONS Inc. won its ten week battle for MCI Inc. yesterday, as Qwest Communications International Inc. withdrew its US$9.9 billion bid after MCI accepted Verizon's US$8.5 billion offer.
MCI said it accepted Verizon's lower price because its large business customers had threatened to defect if it was sold to Qwest. Qwest did not go quietly, accusing MCI of tilting the bidding war in Verizon's favour and short-changing shareholders.
Verizon, the largest United States telecommunications company, will gain control of the second-largest U.S. long-distance telephone company and the No. two provider of telecommunications services to large businesses and governments. Shares of MCI fell sharply after Qwest ended its bid.
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MCI's board justified accepting Verizon's lower offer by saying that several of MCI's large customers preferred a Verizon deal over one with Qwest, and that "a number of customers have also requested rights to terminate their arrangements with MCI in the event of a Qwest transaction."
MCI has about 60,000 large-business customers and roughly one million small-business subscribers. It also runs one of the largest Internet backbones and global data networks and has some 13 million residential telephone customers.
Both Qwest and Verizon began exploring a possible deal with MCI last July. After MCI accepted Verizon's original US$6.75 billion offer in February, Qwest responded with a US$7.6 billion bid.
Some MCI shareholders, particularly large institutional investors, had already spoken out against Verizon's lower bids and urged MCI to negotiate a richer deal with Qwest. But some Verizon shareholders had grown uneasy over the high price for MCI.
Verizon has said it expects to generate US$7 billion in savings and other benefits from the MCI deal and to cut about 7,000 jobs. The two companies expect regulators to approve the deal next year.
