Verizon to Acquire MCI for $6.7 Bil.

NEW YORK Verizon Communica-
tions said Monday it would buy MCI in a deal valued at $6.7 billion.

The deal would give Verizon, already the largest telecom group in the U.S., access to MCI’s Internet network and its long-distance operations and enterprise customers, including the U.S. Departments of Defense and Homeland Security.

The deal includes $5.3 billion in stock and cash. With a special dividend to be paid to MCI shareholders, the deal is worth a total of about $6.7 billion. The two companies said in a joint statement they expect clearance from U.S. antitrust regulators in about a year. Verizon outbid Qwest Communications to form what could potentially be a major rival to the recently unveiled union between SBC Communications and AT&T, which was valued at about $16 billion.

Verizon has spent about $850 million on ads in each of the past two years, per Nielsen Monitor-Plus. Interpublic Group’s McCann Erickson in New York handles creative duties on Verizon Wireless; New York independent mcgarrybowen handles creative duties on Verizon Communications (landlines); and IPG’s TM Advertising in Irving, Texas, recently landed creative duties on SuperPages.com, Verizon’s directory listings business.

Media duties on all brands are handled by Publicis Groupe’s Zenith Media in New York.

MCI spent about $65 million on ads last year, far below the company’s 2003 expenditure of $445 million, per Nielsen Monitor-Plus. MCI works mainly with Havas-owned agencies Euro RSCG and Media Planning Group.

“This is the right deal at the right time,” Ivan Seidenberg, Verizon chairman and CEO, said in a statement. “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. It is a natural and logical extension of Verizon’s strategy to transform our company to serve growth markets and offer broadband technologies.”

The companies indicated about 7,000 jobs could be cut as part of efficiency efforts following a merger.

—Brandweek staff report