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. Last Updated: 07/27/2016

Sprint Accepts $115Bln MCI WorldCom Offer




NEW YORK -- In what would be the largest corporate takeover to date, MCI WorldCom Inc. has agreed to pay $115 billion for Sprint Corp., America's No. 3 long distance carrier, the companies announced Tuesday.


The combined company, to be called WorldCom, will control 30 percent of the U.S. long-distance market and offer wireless telephone and paging services and an Internet network. WorldCom also will be a stronger competitor to AT&T Corp., the largest long-distance and cable television company.


MCI WorldCom late Monday sweetened its offer to $76 per share in stock, up from $63, rather than risk losing Sprint to rival BellSouth Corp., which had offered $72 per share in cash and stock, or $100 billion.


Both companies' boards voted to approve the deal Monday evening.


A successful deal would produce the largest merger ever, eclipsing the pending $82 billion deal between Exxon Corp. and Mobil Corp.


MCI WorldCom boss Bernard Ebbers is no stranger to such massive deals. He stunned the telecommunications industry by masterminding WorldCom's $40 billion acquisition of MCI, which closed in September 1998.


There was no immediate word from BellSouth or from Deutsche Telekom, which owns 10 percent of Sprint, on the MCI-Sprint pact.


MCI WorldCom is the nation's second biggest long-distance company and one of the world's biggest operators of the networks that make up the Internet, but has no wireless calling business. Sprint PCS would fill that hole nicely.


BellSouth wants Sprint's long-distance business to complement its local telephone business in nine Southeastern states. Like the other Baby Bells, the Atlanta-based company hopes that federal regulators will soon allow it to offer long-distance service in its home region.


Consumers might not see any immediate benefit from a Sprint buyout because long-distance and wireless calling rates are at historic lows. But with competition driving telecommunications companies into new markets such as cable television, consumers are expected to enjoy increasingly attractive bundles of telephone, television and Internet services.


Even the mightiest telecom companies are racing to grab an edge in technology and geographic reach so they can compete in a market where distinctions between telephones, television, radio and computers are disappearing.


Sprint, a leading player in long distance, wireless and Internet services, was a plum target.


"Sprint has got some pretty premium assets,'' said Catherine Jackson, a managing director for Trainer Wortham Co., which owns 500,000 shares of MCI WorldCom.


Regulators are expected to scrutinize any deal Sprint makes. Congress passed the Telecommunications Act of 1996 to spur competition, but mergers have greatly reduced the number of major players in the industry.


Not counting Sprint-MCI WorldCom, there have been 233 telecom deals this year totaling $195 billion, according to Thomson Securities Data Co. With Tuesday's announcement, this year's total would far surpass the $220 billion in telecom deals last year.


Deutsche Telekom AG may sell its 10 percent stake in Sprint Corp. and use the proceeds to make acquisitions, a Telekom spokesman said Tuesday.


The spokesman, Hans Ehnert, ruled out the possibility of a counteroffer by Deutsche Telekom for the 90 percent of Sprint it doesn't own, saying the price paid was "much too high" and "for us not imaginable."


Deutsche Telekom believes its Sprint stake is worth up to 17 billion German marks ($9.3 billion), Ehnert said, terming it a "considerable sum."


He would not comment on whether Deutsche Telekom already has been approached about selling its stake, but said it "could come to that."


"We could then very purposefully use the revenues to pursue our strategy," he said, pointing out that some analysts have suggested the company could seek a partner in the United States or Europe.


Ehnert said Deutsche Telekom is particularly interested in expanding its mobile telecommunications business within Europe.