MCI Inc. shareholders yesterday approved the Ashburn company's $8.5 billion acquisition by Verizon Communications Inc., bringing the deal a step closer to completion.
The merger, which must be cleared by the Justice Department and the Federal Communications Commission, would give Verizon MCI's valuable Internet backbone that carries data around the world, as well as access to its lucrative government and corporate clients.
The FCC has an internal, informal target to decide on the merger by next Thursday. The FCC yesterday postponed its open meeting from Wednesday to Oct 28, suggesting that it might take a little more time to review that transaction as well as another blockbuster merger, SBC Communications Inc.'s $16 billion deal to buy AT&T Corp.
MCI said 88.2 percent of the MCI votes cast favored the Verizon offer, which MCI's board selected over a higher bid from Qwest Communications International Inc. because of concerns about Qwest's debt and long-term prospects.
"This vote of support by our shareholders represents a key milestone in the merger approval process," MCI chief executive Michael D. Capellas said in a news release. "The combined company will have the strength and assets necessary to be a competitive force."
MCI, formerly known as WorldCom Inc., has only recently emerged from a long period of turmoil after the 2002 disclosure of extensive accounting fraud carried out by former executives. The company, whose traditional long-distance business has withered, in the second quarter turned its first profit since it emerged from Chapter 11 bankruptcy protection last year.
"We look forward to creating a company that is better able to compete in today's large-business and government marketplace, invest in critical infrastructure and offer the nation's most advanced broadband platform," Verizon Chairman Ivan G. Seidenberg said in a release.
The merger is the latest example of the industry's recent consolidation, in which large local phone companies have largely emerged victorious over long-distance companies such as MCI and AT&T. San Antonio-based SBC is the dominant local telephone provider in California, Nevada, Texas and much of the Midwest.
Both deals are expected to win approval by federal regulators, though analysts say there could be conditions attached to oblige the companies to offer consumers high-speed DSL Internet access without local phone service and to ensure competition for profitable business customers.