Verizon Communications and MCI announced yesterday that Verizon has agreed to acquire global communications provider MCI for $4.8 billion in equity and $488 million in cash.
Verizon said in a statement that the transaction ‘ensures that consumers and businesses will have a supplier with the financial strength to maintain and improve MCI’s Internet backbone network, which is the largest in the world based on company-owned points of presence.’
MCI shareowners will receive 0.4062 shares of Verizon common stock for each common share of MCI. This is worth $4.795 billion and equivalent to $14.75 per MCI share, based on Verizon’s closing price on Friday, February 11.
MCI shareowners will also receive $1.50 per MCI share in cash, worth $488 million, subject to adjustment.
In addition, MCI will pay its shareowners quarterly and special dividends of $4.50 per share, worth $1.463 billion. This includes a 40-cent-per-share quarterly dividend approved by the MCI Board on Friday, February 11.
In total, the transaction values MCI shares at $20.75 a share, or $6.746 billion.
Verizon will assume MCI’s net debt, targeted to be approximately $4 billion at closing, and customary closing conditions will apply.
In addition to MCI shareowner approval, the acquisition requires regulatory approvals, which the companies are targeting to obtain in about a year.
“This is the right deal at the right time,” commented Verizon Chairman and CEO Ivan Seidenberg.
“We have been evaluating a transaction with MCI for some time, and now we have the opportunity to reach an agreement at the right price that works for both companies and at a time when MCI is gaining momentum,” continued Seidenberg. “It is a natural and logical extension of Verizon’s strategy to transform our company to serve growth markets and offer broadband technologies.”