WorldCom’s Acquisition of MCI

Abstract

During 1997, WorldCom and MCI merged in a deal valued at $37 billion. WorldCom finally won the takeover battle with British Telecommunications Plc and GTE Corp for the control of MCI Communications Corp. The merger created a telecommunications conglomerate with estimated revenues of $30 billion in the year 1998. The deal combined the second and fourth largest US long-distance service providers to create a major powerhouse in global telecommunications and Internet services. The new company was renamed as MCI WorldCom. The new MCI WorldCom became the second largest long-distance carrier behind AT&T Corporation. The new merged MCI WorldCom controlled about 25% of the long-distance market compared with approximately 50 percent share of AT&T. MCI WorldCom became the world’s largest carrier of Internet traffic. MCI WorldCom became one of the largest companies offering a range of services from local and long-distance to Internet services to over 22 million clients in over 200 countries. MCI shareholders received $51 in WorldCom common stock for each MCI share they owned. During 2005, Verizon Communications reached an agreement to acquire MCI for $7.6 billion. The acquisition of MCI gave Verizon an international long-distance network and several large corporate customers.