MCI WorldCom Sprints into telco mega-deal
World's largest ever merger bid sees three-way tie-up in US market
Updated A dramatic day of bid and counter bid ended with upstart American telco MCI WorldCom coming up trumps with a $129 billion bid to buy US rival Sprint. The deal is the largest corporate takeover ever and completes the union of the three biggest rivals to AT&T in the long-distance telephony market, MCI, WorldCom (who merged last year) and now Sprint. The new company will be known simply as WorldCom. The $129 billion price tag values Sprint at 25 per cent above yesterday's closing market prices. But as late as last night, the outcome seemed far from certain. A rival unsolicited bid from BellSouth that had originally appeared last weekend disrupting talks between MCI and Sprint was raised yesterday morning -- only to be out-trumped. A meeting of the board of the Kansas-based Sprint yesterday evening is understood to have recommended the enhanced MCI WorldCom offer, although this has not been confirmed by any of the parties. The value of the offer is estimated to be around $123 billion in stock and debt. Either way its value sees off the previous world record – Exxon's $80 billion offer for Mobil. The deal also certain to face detailed regulatory scrutiny in a process that could drag on for months. The combined firm will have around 30 per cent of the US long-distance telephony market against a 48 per cent share held by AT&T. But it will have little direct impact on the UK as neither firm has substantial British interests. MCI will buy Sprint using a mixture of stock and cash but will retain a separate tracking stock for Sprint's successful mobile business. The move marks the latest step in the consolidation of the vast American telephony market, following the Clinton administration's deregulation of the industry. Contrary to government expectations, the deregulation has seen the growing concentration of the number of local players into the world's largest telecomms firms. ®
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