Verizon Seals MCI Deal1/06/2006 4:37 AM Eastern
After a little less than one year, it’s a done deal: Verizon Communications Inc. announced Friday that it has closed its $8.5 billion acquisition of long-distance and backbone-network operator MCI Inc. in a move that will increase its clout as a nationwide communications player.
In acquiring MCI’s extensive nationwide backbone, international network and business-service assets, the regional Bell operating company can now reach well beyond its former East Coast-centric territory. The merger was announced in February 2005.
“We believe that our superior networks are the basis for innovation and competitive advantage in communications,” Verizon chairman and CEO Ivan Seidenberg said in a release. “The combination of our world-class wireless and broadband-access networks with the leading global IP [Internet-protocol] backbone will allow us to deliver the highest-quality end-to-end experience for our customers."
The final sale agreement calls for MCI stockholders to receive 0.5743 shares of Verizon stock for each of their MCI shares. Verizon also will pony up $2.738 per share in a cash payment. Combined, that puts the deal’s value at $20.40 per MCI share.
Verizon will maintain its New York headquarters, operating a business with $90 billion in annual consolidated operating revenues and about 250,000 employees in 150 countries.
As widely anticipated, MCI CEO Michael Capellas announced that he is leaving the company. Verizon’s top management team and board of directors, meanwhile, will remain intact.
As part of the acquisition, Verizon is also creating a new unit to oversee business and government customers inherited from MCI, as well as its own business clients that were previously part of its domestic telecommunications unit. John Killian has been named president of the new unit.