MCI’s shareholders voted to approve the company’s $7.4bn sale to Verizon Communications on Thursday finally ending a bitter takeover battle that pitted Verizon, the largest US telecommunications group, against Qwest Communications, a much smaller rival.
MCI, which had faced opposition from some shareholders who had favoured a higher bid by Qwest, said 209.6m shares, or about 64 per cent of its outstanding shares, were voted in favor of the Verizon bid, while some 27.8m shares were voted against the merger.
An attempt by some large shareholders to block the deal fizzled after Qwest said it was not interested in re-entering the bidding. Verizon hopes to close the deal, which is still subject to approval by federal and state regulators, by year end or early 2006. Its bid for MCI came after SBC Communications agreed to acquire MCI’s long distance rival, AT&T, hastening the consolidation of the US telecommunications services industry.
SBC and Verizon have both been seeking to expand their relationships with domestic and international business customers currently served by AT&T and MCI and plan to use the long distance carriers’ advanced telecommunications networks to cut their costs.
As part of this process Verizon has said it plans to cut about 7,000 jobs and expects to generate savings and other benefits worth about $7bn once the deal is completed.
Opponents of both deals have urged federal regulators to reject them or impose strict conditions, including asset sales but analysts expect regulators to approve them with few restrictions.