Verizon Communications today announced that it will acquire MCI for $5.3bn, made up of $4.8bn in equity and $488m in cash.
The transaction, which has been approved by the boards of both companies, will see MCI shareowners receive 0.4062 shares of Verizon common stock for each common share of MCI.
According to Verizon, the deal will benefit enterprise customers of both firms as it creates a strong competitor that, in most markets, will challenge a larger incumbent.
In addition the firms pointed out that the transaction strengthens the long-term viability of MCI's global network, which is a vital component of the US government communications systems, including those used by the Department of Defense and the Department of Homeland Security.
"This is the right deal at the right time," said Verizon Chairman and chief executive 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."
MCI shareowners will also receive $1.50 per MCI share in cash, worth $488m. This consideration is subject to adjustment at closing, and may be decreased based on MCI's bankruptcy claims-related experience.
Verizon will assume MCI's net debt (total debt less cash on hand), approximately $4bn at closing, and customary closing conditions will apply.
In addition to MCI shareowner approval, the acquisition requires regulatory approvals which the companies expect to obtain in about a year.
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