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Technology Stocks : WCOM -- Ignore unavailable to you. Want to Upgrade?

To: Anthony Wong who wrote (5173)	10/5/1999 12:16:00 PM
From: Mazman	Read Replies (1) \| Respond to of 11568

MCI Worldcom (WCOM) 69 7/16 -2 3/16 (from Briefing.com) Well, after a little gamesmanship from BellSouth (BLS), Sprint (FON) still couldn't be swayed from joining up with MCI Worldcom (WCOM). Last night, the largest merger in history was finalized when Sprint accepted a $115 bln offer from MCI Worldcom, combining the nation's second- and third-largest long distance carriers. The transaction is valued at $76 a share so long as MCI Worldcom's stock price stays between $62.15 and $80.85 a share. Reportedly, WCOM will issue between 0.94 of a share and 1.228 share for each FON share. In addition, holders of PCS shares-- Sprint's tracking stock for its coveted wireless business-- will receive tracking stock in WCOM plus 0.1547 of a share of WCOM stock. Finally, MCI Worldcom will also assume $14 bln in debt and preferred stock. With WCOM's increased bid, the deal is expected to be mildly dilutive to cash earnings per share. Pending regulatory approval, the combined company would have 30% of the consumer long-distance market and a formidable worldwide presence. The regulatory process, however, may not be a cakewalk as FCC Chairman William Kennard seemed a bit perturbed by the impending union, noting that ''Competition has produced a price war in the long distance market... This merger appears to be a surrender. How can this be good for consumers? The parties will bear a heavy burden to show how consumers would be better off.'' In that respect, MCI Worldcom CEO, Bernard J. Ebbers, should be well-schooled as he has engineered more than 60 acquisitions, helping WCOM become the company it is today. Of course, in an effort to appease the FCC, both companies will most likely trumpet the cost savings to be derived from joining forces and how those savings will be passed along to consumers. Warburg Dillon Read, which advised Sprint, predicted annual pre-tax synergies of $2.038 bln in 2001 and $3.6 bln in 2004. What that, ultimately, may mean to consumers remains a mystery, but if approved, we think shareholders will be pleased with the end result as it gives MCI Worldcom a competitive portal to the wireless world, and positions it to be a leader in the telecommunications market with an attractive bundle of services that also includes long-distance, local, and Internet service for consumers and businesses alike.