RealTime IT News

MCI Shareholders OK Verizon Merger

MCI shareholders today voted to accept Verizon's $8.4 billion takeover offer, moving one step closer to completing telecom's latest mega-merger.

The Ashburn, Va., company said preliminary results show approximately 64 percent of outstanding shares, and 88 percent of votes cast, favored the merger. The vote will be certified "as soon as possible," MCI said.

"This vote of support by our shareholders represents a key milestone in the merger approval process," Michael D. Capellas, MCI president and CEO, said in a statement. "The combined company will have the strength and assets necessary to be a competitive force in today's transforming communications marketplace."

The deal still requires approval from state and federal regulators, which Capellas has said he expects by year's end.

In May, Verizon won a lengthy 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 urged other equity owners to do the same. The combination is also opposed by some consumer groups.