MCI (Quote) shareholders today voted to accept Verizon's (Quote) $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 (Quote) 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.
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