Verizon is a step closer to owning a 13.4 percent stake in
MCI after the Department of Justice approved the $1.1
billion purchase.
Under the deal’s structure, Verizon has established a trust for the 43.4
million MCI shares controlled by Mexican billionaire Carlos Slim Helu. When
the purchase closes next week, the stock will transfer to the trust and be
overseen by former U.S. Attorney General Dick Thronburgh.
Acting as trustee, Thronburgh will vote the shares for the proposed Verizon-MCI merger at MCI’s shareholder meeting in late spring or early summer.
“We appreciate the efforts of the Justice Department’s staff who worked
constructively and expeditiously with us to put in place this arrangement
for the shares,” William Barr, Verizon’s executive vice president and
general counsel, said in a statement.
The New York voice and data carrier struck the deal with Helu last month to
strengthen its hand in the bidding war with MCI. At the time, some MCI
shareholders complained that Helu’s terms were better
than theirs. That changed when Verizon sweetened its bid.
Taking control of Helu’s shares is among several steps Verizon must take to
complete its acquisition of the long-distance and enterprise network services
provider. It must also convince shareholders that its $8.4 billion bid is
superior to Qwest’s $9.7 billion offer.
MCI directors are convinced, but there have been rumblings that others
are not, and Qwest has inferred it may not be done. Qwest CEO Dick Notebaert
recently told The Denver Post he would consider reviving the
company’s pursuit if MCI shareholders threw out directors.
Subsequently, The Wall Street Journal reported that Qwest officials
have been talking with large institutional shareholders about the Verizon
proposal.
Verizon will require approval from regulators at the Federal Communications
Commission who may require the company to divest assets and customers to
ensure competition. Groups of smaller carriers and consumer groups will also
have a chance to weigh in.
In all, the review process is expected to last between a year to 18 months.
