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

To: Anthony Wong who wrote (3310)	9/15/1998 6:24:00 AM
From: ANANT	Read Replies (2) \| Respond to of 11568

AW: Here is an article from todays WSJ WorldCom Quietly Completes $37 Billion Acquisition of MCI By STEPHANIE N. MEHTA interactive.wsj.com WorldCom Inc. Monday completed its $37 billion acquisition of MCI Communications Corp., forming a telecommunications behemoth that hopes to challenge the Baby Bells, AT&T Corp. and foreign carriers alike. The closing, announced with little fanfare, marks the end of a nearly two-year saga that began with British Telecommunications PLC's bid to buy MCI and evolved into one of the biggest takeover battles in history as WorldCom and surprise suitor GTE Corp. both sought MCI. Company Profile: WorldCom WorldCom's $51-a-share offer ultimately prevailed, but European regulators threatened to scuttle the deal over concerns that the combined MCI-WorldCom would dominate the Internet's "backbones." To appease regulators, MCI earlier this year agreed to sell its Internet assets to Cable & Wireless PLC for $1.75 billion. The Federal Communications Commission gave its final blessing to the deal Monday. 'Almost Anticlimactic' After all that, the unveiling of MCI WorldCom Inc., as the combined company is known, "seems almost anticlimactic," said Frank Governali, a telecommunications analyst with CS First Boston. Executives of MCI WorldCom don't see it that way. "It has been a very long struggle," conceded John Sidgmore, vice chairman of the combined company. "But this is the most exciting industry on earth, and we feel we are the best positioned players at this game. This is not anticlimactic." As expected, Bernard J. Ebbers, WorldCom's chief executive officer, is president and CEO of the combined company. MCI Chairman Bert Roberts becomes chairman of MCI WorldCom. The company, with revenue of more than $30 billion, now has more than 75,000 employees and 22 million customers. It will trade on the Nasdaq Stock Market under WorldCom's existing stock symbol, WCOM. Under the merger, MCI stockholders receive 1.2439 MCI WorldCom shares for each MCI share held. British Telecom receives $51 per share in cash for each of the Class A shares it owns. Mr. Sidgmore and Timothy Price, the MCI president who will head the combined company's domestic operations, said MCI WorldCom is poised to attack on all fronts. Mr. Price said the carrier plans to penetrate the local-telephone market now dominated by the Baby Bells. At the same time, it is pursuing a global strategy to serve multinational corporations in direct competition with the new joint venture established by British Telecom and AT&T. Then there's the fast-growing data-networking and Internet businesses, which MCI WorldCom hopes to dominate. And Mr. Price stressed that the company will continue to serve residential customers, eventually selling local-calling service to consumers in addition to its existing long-distance offerings. (Some had feared the combined company would abandon the residential market, given WorldCom's historical aversion to the consumer market.) High Expectations It is an ambitious plan, especially considering that the acquisitive WorldCom has never absorbed a company of MCI's size. Wall Street, too, has high expectations for the merger. Some analysts are predicting 20% annual revenue growth next year, even as AT&T has seen revenue flatten. Wall Street is calling for $2.5 billion in cost savings, largely from combining the companies' networks. "The challenge basically is trying to extract the synergies from the combination that they promised," said Mr. Governali of CS First Boston. If MCI WorldCom executives are nervous about such expectations, they're not saying. "Simply stopping MCI's deployment of [local] network facilities saves a significant amount of capital and operating expense," Mr. Sidgmore said. WorldCom already operates local facilities throughout most of the country. "WorldCom has gone through 50 mergers in the last four years, and what we've learned is that the time to do integration is right at the beginning." While it is clear that senior executives are bound to depart, as they have each time WorldCom has made an acquisition, Mr. Price and Mr. Sidgmore insisted that integration at the staff level has been smooth so far. Both staffs pride themselves on being entrepreneurial, doing battle against former monopolies such as AT&T and the Baby Bells. "When we sit down together, it's not like looking at another company; it is like looking in the mirror," Mr. Price said. Despite the recent spate of large telecommunications mergers, the FCC believes the MCI/WorldCom combination will be good for competition in both local and long-distance markets. Thomas Krattenmaker, an FCC analyst, said that given the large investments that companies are making in those markets, the commission "could not find that [the MCI/WorldCom merger] would substantially lessen competition." Even so, FCC Chairman William Kennard warned in a statement that the telecommunications marketplace is "just a merger away from undue concentration." --John Simons contributed to this article. -----------------------------------------------------