MCI Says Leucadia Seeks Clearance to Buy 50% Stake (Update2)
July 12 (Bloomberg) -- MCI Inc., less than three months after emerging from the largest U.S. bankruptcy, said Leucadia National Corp. is seeking U.S. government approval to buy a controlling stake in the company. MCI shares surged as much as 15 percent.
Leucadia, a New York-based investment company that specializes in buying distressed businesses, will seek clearance from the Federal Trade Commission and Justice Department to buy at least 50 percent of MCI, MCI said in a statement. MCI's market capitalization was about $4.6 billion at Friday's close.
Leucadia's decision to buy MCI shares follows a strategy of buying companies cheaply. Ashburn, Virginia-based MCI, the No. 2 U.S. long-distance phone provider, said in April that revenue will fall 14 percent as competition from AT&T Corp. and other phone companies pushes phone calling prices lower. Leucadia's plans may entice other companies to consider a bid for MCI, said Patrick Comack, an analyst at Guzman & Co. in Miami.
``They might have kicked off a bidding war,'' said Comack, who rates the stock ``outperform'' and said he doesn't own the shares. Comack said he has an $18 price target on MCI and the shares could go higher in competitive bidding.
Shares of MCI rose $1.45 to $16.05 at 10:43 a.m. in over-the- counter trading. Leucadia rose 14 cents to $49.07 in New York Stock Exchange composite trading. Leucadia has a market value of $3.47 billion.
MCI may be attractive to local telephone providers such as BellSouth Corp. and SBC Communications Inc., Guzman said.
Antitrust Clearance
A purchase by Leucadia would need antitrust clearance under the Hart-Scott-Rodino (HSR) Act before proceeding, MCI said. Leucadia spokeswoman Laura Ulbrandt didn't immediately return a phone call seeking comment. MCI spokesman Peter Lucht declined comment beyond the statement.
Leucadia last year bought fiber-optic network operator WilTel Communications Group Inc. after WilTel emerged from Chapter 11 protection. With Warren Buffett's Berkshire Hathaway Inc., Leucadia financed Finova Group Inc.'s emergence from bankruptcy in 2001.
Leucadia is also seeking to buy Plains Resources Inc.
Mexican billionaire Carlos Slim is MCI's largest shareholder with 13.5 percent. Private investment firm ESL Partners LP has 6.4 percent and MatlinPatterson Global Opportunities Partners L.P. has 5.7 percent, according to government filings. |
