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To: TheStockFairy who wrote (5126)	10/4/1999 1:43:00 AM
From: Ibexx	Respond to of 11568

From NYTimes, Monday, October 4: _______ October 4, 1999 Dueling Bids Emerge for Sprint By LAURA M. HOLSON and SETH SCHIESEL A takeover battle for the Sprint Corporation, the nation's third-largest long-distance company, erupted over the weekend as two suitors emerged with competing offers, people close to the companies said. If either of the current offers was accepted, the deal would be the largest business takeover yet. Sprint's board met yesterday and into the evening to compare a friendly, $93 billion merger offer from MCI Worldcom Inc., the No. 2 long-distance carrier, and an unsolicited offer of $100 billion from the BellSouth Corporation, the dominant provider of local telephone service in the Southeast. Either would be bigger than the largest takeover to date, last year's $82.5 billion merger agreement between the Exxon Corporation and the Mobil Corporation -- companies whose market value has not been stoked by the communications revolution, as Sprint's has. Big savings for companies, but potential job losses. People close to the talks said MCI Worldcom could emerge as the winner, with an announcement made early this week. The takeover fight escalates the intensity of the consolidation that is sweeping the telecommunications industry, as even the giants scramble for greater geographic reach and financial heft, and the ability to offer a full line of local, long-distance, wireless and Internet access services. Besides Sprint's extensive national and international long-distance network, the company has a collection of local telephone operations around the nation, a national wireless network and one of the major Internet "backbone" networks through which other companies provide Internet access to consumers. For consumers, the impact of a Sprint takeover might not be immediately apparent because rates are already so competitive. A combined Sprint-MCI Worldcom would pose a larger competitor to the AT&T Corporation, which would remain the nation's largest long-distance company. But AT&T's share of the long-distance market has been eroded steadily for years by MCI and Sprint even as long-distance prices have tumbled. Those are among the factors that Federal regulators might weigh in considering whether a Sprint-MCI deal would pass antitrust muster. Were BellSouth to succeed in winning the approval of Sprint's board, it might still take years for the combined company to go through the additional Federal and state-by-state regulatory reviews that would be necessary before the company could offer a package of local and long-distance services in BellSouth's traditional Southeastern region. To date, no Bell company has received approval to offer long-distance service within its local-service region. For the companies that are seeking to acquire Sprint, however, the impact could be immediate and vast. A deal could quickly yield billions in cost savings by eliminating overlapping operations -- and, possibly, jobs -- while expanding product lines. MCI Worldcom and Sprint had been hammering out the details of a combination the last two weeks, and both companies' boards had been planning to meet to consider an $93 billion stock swap -- Sprint's board yesterday and MCI Worldcom's today. That schedule remained, but the agenda was altered when BellSouth made an unsolicited $100 billion stock and cash offer for Sprint on Saturday. None of the companies would comment yesterday, but people close to the negotiations provided the details. Sprint's board met in Kansas City, Mo., all day yesterday -- and well into the evening -- to discuss the options. People close to the discussion said that William T. Esrey, chief executive of Sprint, favored a friendly merger with Worldcom, in part, because he believes the duo would be a more formidable company in the long run. Among other benefits, the merger would give Worldcom much-needed wireless assets. Sprint's combined operations are split into two separately traded stocks -- one stock representing its long-distance network and the other made up of the company's wireless assets. Under the MCI Worldcom offer, Sprint shareholders would receive 0.89 MCI Worldcom share for every share of Sprint's local and long-distance telephone business -- an equivalent of $62.80 a share as of Friday's market close -- or about $56 billion. MCI Worldcom would also acquire Sprint's wireless assets for about $32 billion, and pay a premium on top of that of an additional 0.1547 MCI Worldcom share for every Sprint wireless share, or about $10.90. BellSouth, meanwhile, is offering Sprint a combination of stock and cash valued at $72 a share for Sprint's telephone assets, or about $65 billion. Although the cash portion of the bid has yet to be determined, it could go as high as 50 percent of the total offer. BellSouth would also acquire Sprint's $32 billion wireless operations and create a separate tracking stock for those assets, offering shareholders a premium of $7.25 for each share of the wireless stock. BellSouth is also offering Sprint some price protection with its offer, in case BellSouth's stock price drops dramatically. At first glance, BellSouth's $72-a-share bid looks more attractive than MCI Worldcom's $62.80 bid. But MCI Worldcom's stock price has slipped almost 13 percent since word first surfaced two weeks ago that it was considering a Sprint deal. Now, analysts will be keen to see how BellSouth's share price reacts to news of the company's offer. Any deal with Sprint is sure to dilute BellSouth's earnings -- from 25 percent to 50 percent depending on the cost savings the combination yields. Still in question is what Sprint would do with its international partners, Deutsche Telekom and France Télécom, each of which owns 10 percent of Sprint. But neither can increase its stake without Sprint's permission, nor can they easily prevent Sprint's merging with an outside company. For nearly a year, Deutsche Telekom has held off-and-on discussions to acquire Sprint outright, and the German company could still emerge as the eventual buyer -- although France Télécom would have to agree to such an outcome. The bidding is yet another result of the Telecommunications Act of 1996, which removed many of the regulatory walls that had separated different precincts of the communications industry. Those changes unleashed a torrent of communications deal making in which multi-billion dollar transactions have become common. Since 1996, the seven original Baby Bells have agreed to become four, with the Bell Atlantic Corporation acquiring the Nynex Corporation and SBC Communications Inc. acquiring Pacific Telesis Group. SBC has also agreed to acquire the Ameritech Corporation, a deal that could win approval from the F.C.C. as soon as today [Page C2] and Bell Atlantic has agreed to merge with the biggest non-Bell local phone company, the GTE Corporation. U S West Inc., meanwhile, has agreed to be acquired by Qwest Communications International Inc., the upstart long-distance carrier. The big long-distance carriers have gone on an acquisition tear as well, with MCI Worldcom being formed last year by the merger of the MCI Communications Corporation and Worldcom Inc. AT&T, meanwhile, has agreed to acquire two of the biggest cable television companies, Tele-Communications Inc. and Mediaone Group Inc. All along the takeover front, however, none of the nation's big telecommunications carriers have been as quiet so far as BellSouth, the dominant local phone company in the Southeast. Besides an agreement in April to acquire 10 percent of Qwest for about $3.5 billion, BellSouth has largely stayed away from big deals, at least so far. (The Qwest investment has not been profitable for BellSouth; its Qwest stake is now worth only about $2.2 billion.) A spokeswoman for BellSouth would not comment on the offer yesterday. But it was clear that F. Duane Ackerman, BellSouth's chairman, has had a dramatic reversal in his strategic thinking since last spring. As BellSouth's investment in Qwest was announced, Joseph P. Nacchio, Qwest's chief executive, said he thought that deal was basically incompatible with BellSouth's investing in another long-distance company. Ackerman also appears to have had a wholesale change of heart about the regulatory climate. For BellSouth, an acquisition of Sprint would be fraught with far more regulatory difficulties than would a deal between Sprint and MCI Worldcom, which may be why BellSouth has made a more lucrative offer. In fact, a BellSouth-Sprint deal could require divestitures of assets worth billions of dollars to satisfy regulatory requirements and it could take many years before the two companies could fully integrate their remaining operations. The biggest problem is that BellSouth is not allowed to sell long-distance telephone or data services in the Southeast until it convinces the Federal Communications Commission that it has opened its local networks to competitors. BellSouth has already been rejected by the F.C.C. three times on that score, once for South Carolina and twice for Louisiana. ________ Ibexx

To: TheStockFairy who wrote (5126)	10/4/1999 1:44:00 AM
From: Marty Rubin	Read Replies (1) \| Respond to of 11568

(WSJ: "[BLS] Makes Offer To Acquire Rival [FON] Effort to Halt [WCOM] Deal....") October 4, 1999 BellSouth Makes Offer To Acquire Rival Sprint Effort to Halt MCI WorldCom Deal Should Top $100 Billion in Value By STEVEN LIPIN and REBECCA BLUMENSTEIN Staff Reporters of THE WALL STREET JOURNAL BellSouth Corp. made a last-minute, higher bid to acquire Sprint Corp. even as MCI WorldCom Inc. and Sprint inch closer to a merger, according to people familiar with the matter. Sprint's board met Sunday in New York to weigh the two competing offers, and adjourned Sunday night without a decision. But, barring a last-minute change, it is expected to formally vote for the MCI WorldCom proposal Monday morning at another scheduled meeting, since a special committee of the board voted unanimously to proceed with the WorldCom proposal, a person familiar with the matter said. MCI WorldCom's board is expected to vote on the proposed deal this evening, people familiar with the matter said. Sprint is expected to proceed with a WorldCom bid even though the BellSouth offer, which offers stock and cash, is currently richer than the WorldCom offer, which is an all-stock offer that fluctuates in value along with WorldCom's stock price, people familiar with the matter said. Both bidders are vying for a company with more than $17 billion in annual revenue with a strong national long-distance and wireless business. Each bidder would have regulatory problems to overcome. While WorldCom may have to divest itself of Sprint's Internet business, a BellSouth-Sprint pact could result in significant wireless divestitures or a possible spinoff. Deal's Possible Value Any deal would likely be one of the largest ever. The current offer from BellSouth is valued at about $72 billion, though it is possible BellSouth may try to sweeten its bid. The current bid includes a premium for Sprint's cellular unit but excludes the value of the unit's shares, which trade separately as a so-called tracking stock. The WorldCom bid is valued at about $65 billion using the same criteria. Sprint also has about $13 billion in debt that would be assumed by either bidder. Adding the nominal value of the PCS business, which isn't actually being acquired, would put the total value of any deal at more than $100 billion. BellSouth, Sprint and WorldCom wouldn't comment. William Esrey, Sprint's chairman and chief executive officer, told directors that he favored the WorldCom proposal because of the strategic fit, according to a person familiar with the matter. Looking at WorldCom's stock over a 20-day moving average narrows the gap in the two bids, he told directors. Mr. Esrey has acknowledged to WorldCom that he believes the size and scale of the combined company would give it a competitive edge. Together, the combination would create one of the biggest telecom companies in the world. But Mr. Esrey may have problems with his partners France Telecom SA and Deutsche Telekom AG, which could complicate a transaction, given that it must be approved by shareholders representing a majority of shares outstanding. The chief executives of the two companies sit on the board of Sprint, and both foreign carriers own 10% of the company's shares. The two are opposed to the WorldCom proposal because of antitrust concerns in Europe, a person familiar with the matter said. Mr. Esrey is believed to have rebuffed an attempt by the two carriers to release them from a standstill agreement that precludes the two companies from increasing their stake in Sprint or talking to other bidders. In addition, Ron Sommer, Deutsche Telekom's CEO, and Michel Bon, France Telecom's CEO, objected at the Sprint board meeting to any move to try to vote without asking for a "best and final" offer from both bidders, a person familiar with the situation said. The special committee of the board is believed to consist of all the directors except for Messrs. Sommer and Bon. Figuring Value of Bids BellSouth's bid is valued at about $72 a share for Sprint's main phone business, with as much as half of the bid consisting of cash, people familiar with the matter said. The stock component includes a collar to guarantee value to Sprint shareholders as long as BellSouth's stock falls no more than 15%, people familiar with the matter said. At 50% cash, BellSouth would be adding $35 to $40 billion in debt to its books, and raising one of the largest financings on record. MCI WorldCom's bid is valued at about $63 a share in stock, or 0.89 of a WorldCom share for each Sprint share, these people said. The proposal has no collar, so the value changes as the market changes. Since news of the WorldCom-Sprint talks broke, WorldCom's stock has been hurt. If MCI WorldCom's stock were to recover to $82 a share, the value of its offer would rise to $73 a share. WorldCom's proposal has a breakup fee of $2.5 billion and a provision that Sprint couldn't talk to other bidders for 60 days. BellSouth's proposed breakup fee is a less expensive $1.5 billion, people familiar with the matter say. On Friday, Sprint's stock rose $2.75, or 5.1%, to $57 and the PCS tracking stock rose 93.75 cents to $75.50 in New York Stock Exchange composite trading. WorldCom's shares closed at $70.50, down $1.375, while BellSouth's closed at $45.375, up 37.5 cents. Both potential buyers intend to swap the PCS tracking stock for their own tracking stock and pay a premium for the PCS shares. People familiar with the matter said the BellSouth premium consists of about $7.25 a share in cash; for MCI WorldCom, the premium would consist of additional shares of MCI WorldCom valued at about $10.90 a share, or 0.1547 of a WorldCom share for each PCS share. Scrutiny From Regulators Both bids would engender regulatory scrutiny. As reported earlier, a marriage between MCI WorldCom and Sprint would face antitrust concerns because of their strong data and Internet businesses. For BellSouth, the Baby Bell still lacks permission to offer long-distance services in any of its nine states; this means it would have to shed Sprint's long-distance customers in the South or wait until local companies can offer long-distance services. But just as significantly, BellSouth also may have to consider divestitures or resolve problems as a result of overlapping wireless assets because federal law prohibits any company from operating more than one wireless license in a market. The MCI WorldCom side argues that there would be greater synergies -- or cost savings -- to pass on to shareholders if they purchased Sprint because both companies are long-distance concerns. MCI WorldCom believes it will have synergies in excess of $2 billion, helping make a combination nondilutive to cash earnings per share within the first year. BellSouth will argue that its deal is complementary, and procompetitive because it will blend local and long distance rather than produce a horizontal combination of the No. 2 and No. 3 long-distance providers. BellSouth moved to assemble a bid after news reports that WorldCom and Sprint were in merger talks. While the conservative Atlanta company has eschewed big mergers during the consolidation of the telecom industry, it was persuaded to move by the argument that Sprint is the last independent long-distance phone company with a premier wireless business. One factor that has kept BellSouth from jumping into the battles for other telecom companies is that any significant deal would result in a hit to earnings. Analysts expect BellSouth to achieve double-digit growth in earnings for 1999 and 2000. Using certain assumptions about the levels of synergies, BellSouth is arguing that, with synergies, a transaction with Sprint could be slightly accretive to cash earnings in the first year, and actually increase cash earnings by 25% in the second year. Buying Sprint would reduce traditional earnings by 23% in the first year, though that figure would be reduced to 3% to 5% in the second year, these people said. Consolidation Concerns BellSouth executives are apparently concerned about the company's prospects in a rapidly consolidating world. In public, BellSouth Chairman Duane Ackerman doggedly sticks to the company's longtime position that the company has the size and scope it needs to compete in the new world of telecom giants. But in private, he has conceded that the company, in hindsight, should have pushed earlier to buy or merge with another big telecom player. Mr. Ackerman met for several hours with Sprint's Mr. Esrey on Saturday and then again Sunday morning to discuss BellSouth's interest in Sprint. BellSouth recently hired Gary Forsee, a longtime Sprint executive, as executive vice president and top dealmaker. Mr. Forsee recently ran Sprint's struggling Global One venture with Deutsche Telekom of Germany and France Telecom. France Telecom and Deutsche Telekom believe an MCI WorldCom-Sprint deal would destroy the value of Global One. MCI WorldCom has been building its own European network and is unlikely to maintain Global One as it is currently structured. Any deal would create a major antitrust problem in Europe. Global One is a joint venture that was created in 1994 to serve the telecommunications needs of multinational corporations. But the partnership has consistently lost money, and its future has been uncertain as the two international partners have squabbled. Global One Alternatives All three partners have said they are examining alternatives to the Global One structure. While each of the companies is represented on Sprint's board, the companies can't block any deal that Sprint makes. And they can't make their own bids without permission from Sprint. Deutsche Telekom's management meets Monday to discuss whether to bid for the 90% of Sprint that the company doesn't own, but company officials already doubt they can win a full-blown bidding war with MCI WorldCom, making a counterbid unlikely. One company official said Deutsche Telekom couldn't achieve the same cost savings in a deal that MCI WorldCom could achieve. "Where you don't have a lot of fit strategically, you don't have a lot of synergy and then cannot be as flexible on price," the official said. Deutsche Telekom urged its partner France Telecom last year to jointly bid for Sprint, but people familiar with the situation say France Telecom objected and blocked Deutsche Telekom from acting alone. Deutsche Telekom then lost a bid for Telecom Italia to Olivetti SpA, and its partnership with France Telecom collapsed. Deutsche Telekom officials now say the abrupt split with France Telecom was necessary to pave the way for a new international strategy. "We needed a big bang," one official said. "I don't think it would be bad at all to be free of the emotional handcuffs, the legal handcuffs and the partnership handcuffs." Such statements reflect an attempt by Deutsche Telekom's senior management to dispel the view that a successful takeover of Sprint by MCI WorldCom would leave the German phone company adrift without a secure anchor in the key U.S. telecommunications market. Should MCI WorldCom take over Sprint, Deutsche Telekom is likely to go on a buying spree to find partners that match its priority areas: mobile communications, consumer Internet and corporate data services including Internet-based communications. --Stephanie N. Mehta and William Boston contributed to this article. Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved.

To: TheStockFairy who wrote (5126)	10/4/1999 11:08:00 AM
From: JDN	Read Replies (1) \| Respond to of 11568

Dear Stock Fairy: As I was afraid of a bidding process has started. Hope WCOM doesnt lose it head. I can tell you this, I live in S. Fla. and am SUBJECTED to Bell South. As an employee, were I you, I would vote for the WCOM deal. If it goes the otherway expect to own a crappy stock!!! Now, can you tell me, why wouldnt WCOM just keep the wireless portion and sell the longdistance portion to Bell South? Seems to me then each would get what it wants?? JDN