BT will cut up to 20 per cent off the price it will pay for control of US telco MCI.
The new terms of the merger, which was originally announced in November and involves BT buying the 80 per cent it does not already own, will be a blow to MCI shareholders, who will now own 25 per cent of the enlarged group rather than 34 per cent.
The terms were renegotiated following MCI?s warning last month that it would take an $800 million cut in its profits due to difficulties breaking into its local US markets. MCI chiefs were adamant at the announcement today that the telco will continue its quest for a share of the $100 billion local market which is being jealously guarded by the US Baby Bells. Company chiefs also said management of the new group would remain unchanged.
BT would pay around $17 billion to take control of the merged company. MCI shareholders will get fewer shares but a larger cash payment of $7.75, compared to $6 as outlined in the original terms. The number of outstanding ordinary shares of Concert - the new company - will be 10 per cent less than originally anticipated, at approximately 8.5 billion.
Peter Bonfield, chief executive of BT, told a packed news conference that the merger ?remains steadfast? and that the new terms were ?in the best interest of both sets of shareholders?. ?The merits of the merger remain as compelling as ever,? he added.
Bonfield reiterated that the combined force would boast 43 million business and residential customers worldwide, and a six per cent share of the #418 billion global market.
Iain Vallance, chairman of BT, said: ?We are pleased that we have been able to reach agreement so quickly on the best way forward, following the changes in the US environment.?
However BT and MCI will have a tough time winning support from MCI shareholders, whose share of the company will be reduced. Company chiefs will meet shareholders at an extraordinary general meeting soon.
Said one US investor: ?The revised terms are probably the only terms that MCI shareholders would now find acceptable: increase the cash and take it on the chin on the stock conversion. I don?t think MCI holders will want to remain in Concert after this fiasco, but the increased cash proportion is the bait to keep everyone quiet.?
At the news conference, MCI president Tim Price was at pains to underline its commitment to break the monopoly of the Baby Bells in the local US market. ?Participation here is not optional - it?s a strategic imperative.?
Bonfield agreed that the local US market should be the short to medium term focus for Concert, but said this would not mean de-emphasising on growing its European presence ahead of complete deregulation next year.
IBM and Technical University of Munich team demonstrate how Shor's algorithm, which can't be cracked by conventional computers, can be solved quickly with quantum computing
Hubble Space Telescope finds superflares from young red dwarfs could strip away planetary atmosphere
Younger stars are 100 to 1,000 times more energetic than when they're older
Two of the big four supermarkets will use the system to control sales of restricted products
PUBG news and updates: November's Update #23 to bring new Skorpion pistol and changes to blue zone visibility
Genuinely useful side-arm coming to PUBG in Update #23