MCI shareholders will vote on Verizon’s
takeover offer on Oct. 6, the companies announced today. The meeting will
be held at MCI’s headquarters in Ashburn, Va.
In May, Verizon won a
bruising, drawn-out battle with Qwest for MCI.
Ultimately, the long-distance and enterprise network services provider
deemed Verizon’s $8.4 billion offer superior to Qwest’s $9.7 billion
proposal.
MCI officials cited several reasons for denying Qwest, including concerns
about its overall financial picture; questions about its ability to invest
in new capabilities; doubts about synergies; and feedback from current
enterprise customers.
Qwest and Verizon pursued MCI because of its large IP data-service deals
with government agencies and corporations. And with the pending merger of
SBC and AT&T, neither wants to be left behind
by the wave of industry consolidation.
The Baby Bells consider those long-term, high-margin contracts crucial to
their future prosperity, as cable operators, VoIP upstarts and wireless
carriers try to hone in on their traditional businesses.
Not all MCI shareholders were happy with the decision. Deephaven Capital,
which owns nearly 5 percent of MCI shares, has publicly opposed a merger with Verizon and has urged other equity owners to do
the same.
The combination is also opposed by some consumer groups, as well as the
California ISP Association, which recently blasted the
proposal.
The deal requires approval from state and federal regulators, which MCI CEO
Michael Capellas expects
by year’s end.
