Verizon Takeover Of MCI Approved For $6.8 Billion

The boards of Verizon Communications Inc. and MCI Inc. last night approved the acquisition of the nation's No. 2 long-distance carrier for about $6.8 billion in cash, shares and dividends, according to people familiar with the situation.

The companies planned to announce the acquisition this morning, these people said, and MCI Chief Executive Michael Capellas called his counterpart at Verizon, Ivan Seidenberg, to congratulate him last night, according to these people.

Amid a flurry of telecom deals, the fight over MCI has been intense because the No. 2 U.S. long-distance company, with 14 million residential and more than a million coveted corporate customers, is one of the last companies left unattached in the recent rush to consolidate. Verizon's original offer was valued at about $6.3 billion. Just two weeks ago, SBC Communications Inc. agreed to acquire AT&T Corp. for $16 billion, while Sprint Corp. agreed to buy Nextel Communications Inc. for $35 billion in December.

Qwest Communications International Inc., which launched its own bid for MCI before the weekend, could still try to break up any deal between MCI and Verizon.

Oh, to be Michael Capellas!

He was the chief of Compaq, where he (along with Carly F of HP) organized the sale to HP. And he walked out of the deal several million dollars wealthier.

He then moves to WorldCom (soon to be renamed MCI), after spending around 2 months at the new HPQ (and he got additional renumeration for those two months as well). Now he just quarterbacked the sale of MCI, and he will receive another hefty paycheck for that.

BTW I am not criticizing the guy. He is a smart bizman. What i do know is if Capellas became head of a company the employees better start hedging their futures.

I guess this is the new millenium version of 'Chainsaw' Al (to those who can recall mr Slash and burn himself Al Dunlap). Although Fiorina and Capellas are ninjas while Dunlap was a raging bull in a China shop who didn't care a bit about perception.

And by the way any person with his/her eye on the market could have told you the only reason Capellas was hired by WorldCom/MCI was so as to freshen it a bit, get rid of some of its market halitosis, and then sell it the first moment he could get a good price (although he dallied for a while). But there were many who somehow thought that he was there to stay. I guess hope is a good thing. LOL.

Al Dunlap was the best corporate turnabout slick of the 90s. The moniker 'chainsaw' came from his penchant to just fire off people like he was popping MnMs! His operating philosophy was to make extreme cuts in all areas of operations, including massive layoffs, to streamline business. The concept of team work and group dynamics seemed to be foreign to Dunlap. He operated as if people are dispensable and fired them if they cost more than he felt they were worth.

By the way he had other names: 'The Shredder,' and 'Rambo in Pinstripes.' But Chainsaw Al was the most famous of them all. The last major gig he had was as CEO of SunBeam (which went Bankrupt in 98).

This Wednesday, July 14th, we will become listed on the NASDAQ stock exchange. The MCI management team will host an all-employee, live broadcast from New York at 1 p.m. Eastern time. We are calling this MCI Day.

I look forward to celebrating this incredible milestone with each of you and also having the opportunity to answer your questions about MCI's moving forward.

Michael

I should have probably have used a different tense. I was using the active, basically saying that he moved to WorldCom, which soon after got its name changed to MCI. I did not mean that they were doing the name shift right now or in the future. Sorry for the misunderstanding.

Same thing about the bankruptcy.

But it was apparent (and profitable LOL) from the start that all Capellas was there to do was freshen it up for sale. As i said, it was quite profitable that many people thought that was not the case (when it was obvious from the start).

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