RealTime IT News

MCI-Verizon Merger Vote Set

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.