Financial Times - AIRTOUCH: MCI decides against bidding
January 9, 1999
MCI WorldCom yesterday ruled itself out of the bidding for AirTouch, the US cellular telephone company, removing one of the hurdles to UK-based Vodafone's $55bn offer. The fast-growing US carrier made an unofficial overture to AirTouch earlier this week to express its possible interest in making an offer, which would have touched off a three-way fight for the company.
The frenzy of interest in AirTouch began when it emerged on New Year's eve that the company was close to agreeing a $45bn takeover by Bell Atlantic, the New York-based local telephone company. It remains unclear whether Bell Atlantic will itself return with a revised offer.
After reviewing the possibility of a combination with AirTouch Communications, MCI WorldCom has determined not to pursue a bid for the company at this time, MCI said. It did not rule out returning to bid for AirTouch, or even Vodafone, at a later time, though such a move was seen as unlikely.
Though it gave no reason for the decision, the chances of an MCI WorldCom takeover bid had been seen on Wall Street as slim. The company has set its sights primarily on large international business customers, and so would have had little to gain from AirTouch's regional, consumer-focused network.
Also, Vodafone's attempted knock-out bid for the company, which values AirTouch at a 50 per cent premium over its price a month ago, has set a high hurdle for any rival bidder.
However, the fact that Bernie Ebbers, MCI WorldCom chief executive, at least cast his eye over AirTouch points to the scarcity of independent wireless companies and the rapid consolidation that is under way in the industry on both sides of the Atlantic.
MCI WorldCom was considered to be one of the few telecommunications companies with the wherewithal to mount a serious challenge to the Vodafone bid.
As one of the fastest-growing large companies in the industry, its shares have attracted a higher valuation than most. That has left it in a strong position to make acquisitions, as the company demonstrated when it outbid British Telecommunications for control of MCI two years ago.
Confirmation of Mr Ebbers' interest in AirTouch, however brief, added to speculation yesterday that he would eventually make a bid to acquire one of the other wireless networks. Shares in Nextel, a start-up national network, have jumped more than 40 per cent since news first emerged that AirTouch was in takeover talks.
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