MCI-Verizon deal OK'd
Stockholders' vote clears way for regulators' review
By Jeff Smith, Rocky Mountain News
Friday, October 7, 2005
MCI Inc. stockholders overwhelmingly approved a $8.5 billion merger with Verizon Communications on Thursday, officially closing the book on a deal once sought by Qwest Communications.
More than 88 percent of the votes cast supported the sale to Verizon, according to preliminary results, the kind of resounding outcome expected after Qwest said last week that it wouldn't submit a new offer for MCI.
Qwest dropped out of the bidding war in May at $9.75 billion after being rejected several times by MCI's board. But the Denver telco had left the door open a crack before ending speculation of a possible renewed bid last week.
Minnesota hedge fund Deephaven Capital Management tried to solicit proxies opposing a MCI-Verizon merger but, without an alternative bid on the table, failed to gain traction.
No one spoke for or against the merger during a 10-minute meeting attended by about 100 people at MCI's headquarters in Virginia, the Associated Press reported.
Qwest didn't comment Thursday. The telco last week said it was focusing on new services, streamlining operations and other "strategic" opportunities.
MCI said the vote would be certified as soon as possible and that it expected the merger to close in late 2005 or early 2006, pending regulatory approvals.
"This vote of support by our shareholders represents a key milestone in the merger approval process," Michael Capellas, MCI president and chief executive officer, 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."
Qwest and smaller telcos have continued to lobby against the pending Verizon-MCI and SBC-AT&T mergers, complaining about alleged anti-competitive practices. While the lobbying isn't expected to be successful in upsetting the deals, it may result in federal regulators placing more conditions on the mergers.