The largest deal in history - BT-MCI

British-American telephone colossus due in autumn
The US Department of Justice on Monday cleared the acquisition of America's second-largest telecommunications company, MCI, by British national telecom operator British Telecom (BT). Thus, another step has been taken towards the largest corporate merger in the history of the planet (transaction amount: $24 billion). The final word goes to the US Federal Telecommunications Commission. As reported by Reuters, officials from this department promise to make their decision on the deal by the end of the summer. If the commission gives its consent, the product of the merger between BT and MCI, Concert Plc., will celebrate its birth in the fall of this year.

British Telecom's plans to take over American operator MCI were first announced in November last year. The merger should result in a new company, Concert Plc., which will be worth $54 billion and serve 43 million customers in seventy countries. That is, the second largest telephone company in the world will appear. The first place will remain with the Japanese Nippon Telegraph and Telephone Corp., which, according to the Financial Times, is worth $119.56 billion, occupying fourth place in the ranking of the world's largest companies.
The shareholders of both companies agreed on all the details a year ago. The merger scheme is as follows: BT buys 80% of the shares of Washington-based MCI for $24 billion (the British acquired 20% of the shares of MCI back in 1993). If the deal is successful, BT shareholders will be paid special dividends (a total of £2.2 billion). And MCI shareholders will receive 5.4 Concert shares for each MCI share and another $6 in cash.
In May of this year, the EU Commission gave the green light to the super deal. At the same time, the Commission slightly adjusted its conditions. In particular, “in order to guarantee freedom of competition,” the companies were obliged to take measures so that their underwater cables lying at the bottom of the Atlantic could be used by competing firms.
And on Monday the US Department of Justice gave its permission. He also made adjustments to the terms of the deal. According to the department's antitrust division, the department's conditions are intended to keep prices and service at the same level for the American consumer of MCI services. The Americans also demanded that BT maintain trade secrets for any information received from American telecommunications companies through MCI. In addition, the Department of Justice demanded that it retain the right to access any company documents.
Representatives of American telephone companies competing with MCI were not unanimous in their assessment of the Justice Department's decision. AT&T's official commentary states that there is a "significant improvement in terms of the deal that will benefit competition and therefore the consumer." Representatives of Bell South Corp., on the contrary, were critical of the decision. “It contributes more to the promotion of Great Britain into the American telecommunications market than to providing better conditions for competition to Bell companies, which, by the way, employ half a million Americans,” Bell South Corp. said in an official commentary.
IVAN CHEBERKO, ILYA VINOGRADOV

Newspaper "Kommersant" No. 106 dated 07/09/1997, p. 7

Authors:

Ivan Cheberko