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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (6602)	5/29/1999 1:24:00 AM
From: 2MAR$	Respond to of 108040

Yesssssss! SKYT bought out for 1.3 BILLION!! We have a REAL winner here folks: MCI WorldCom To Buy Skytel For $1.3 Billion By Jessica Hall NEW YORK (Reuters) - MCI WorldCom Inc. (Nasdaq:WCOM - news), the No. 2 U.S. long distance telephone company, agreed Friday to buy paging company SkyTel Communications Inc. (Nasdaq:SKYT - news) for $1.3 billion in stock in a move that will allow it to expand into wireless messaging and data services. Based on MCI WorldCom's closing stock price Friday, the long-rumored agreement values SkyTel common stock at $21.59, a 6 percent premium over SkyTel's closing stock price. Shares of SkyTel have risen sharply in recent weeks on expectations it may be acquired by MCI WorldCom. SkyTel, which has 1.6 million paging customers, recently hired Warburg Dillon Read to help it explore its strategic options. Rumors of a possible MCI WorldCom deal were further stoked Tuesday on news that an MCI WorldCom employee reserved a World Wide Web address that included both companies' names. MCI WorldCom had said that the employee had acted on his own initiative and that the Web address request was not ''an indication of any official company intention.'' MCI WorldCom Friday said the requested Web address and the acquisition agreement were a ''coincidence.'' Shares of MCI WorldCom fell $1.125 to $85.25 in after-hours trading Friday following the announcement. Shares of SkyTel were halted. The deal follows MCI WorldCom's agreement last month to purchase wireless cable television company CAI Wireless Corp. . The company plans to use CAI Wireless' technology to provide voice and data services directly to consumers without using the Baby Bell's local phone networks. MCI WorldCom this year has walked away from opportunities to buy wireless phone companies Nextel Communications Inc. (Nasdaq:NXTL - news) and AirTouch Communications Inc. MCI WorldCom, however, has said it expects to move into the wireless telephone business in the future. MCI WorldCom is currently the largest reseller of SkyTel services. It will now be able to offer paging services more economically and package them together with its voice, data and Internet services. Analysts said the deal would be a major relief for SkyTel, which like other paging companies has suffered at a time when consumers carry cell phones, Palm Pilots and other equipment that make traditional pagers unnecessary. ''The future of traditional paging as a stand-alone entity is uncertain. They are struggling to remain relevant. But as part of a bundle of services, paging becomes more viable. It makes more sense as part of a larger arsenal,'' said independent telecommunications analyst Jeffrey Kagan. SkyTel, however, has tried to find new markets for paging services. The company has aggressively moved into advanced messaging services, such as two-way paging and interactive services that allow customers to respond to a message by touching certain keys on the pager. SkyTel also plans to offer wireless email services and unified messaging systems that allow customers to manage voice mail, email and faxes through a pager. It will now benefit from MCI WorldCom's vast distribution and marketing efforts, analysts said. ''SkyTel is the industry leader in wireless messaging, and is ahead of the curve in developing and implementing wireless data applications... SkyTel also brings a talented management team with a wealth of experience in wireless communications,'' MCI WorldCom Chief Executive Bernie Ebbers said in a prepared statement. Under the agreement, each SkyTel share will be exchanged for 0.25 shares of MCI WorldCom, as long as MCI WorldCom's stock trades above $80 a share in the days before the deal closes. Holders of SkyTel's preferred stock will receive one share of MCI WorldCom preferred stock for each share of SkyTel preferred stock that they own. The MCI WorldCom preferred stock will be convertible into common stock. Including debt, the total value of the deal is about $2.06 billion, an MCI WorldCom spokesman said. MCI WorldCom said the deal will give a slight boost to its profits but will not significantly affect its results. SkyTel had 1998 revenues of $518 million, while MCI WorldCom had more than $30 billion in revenues last year. MCI WorldCom and SkyTel are both headquartered near Jackson, Miss. SkyTel has about 2,000 employees, including about 800 in Jackson, Miss. MCI WorldCom, which has about 74,000 employees, declined to comment on any possible job cuts. The deal is expected to be completed in six to nine months, pending shareholder and regulatory approval. Kaaaaching! 2MAR$