NEW YORK (CNNfn) -- Long-distance telephone company WorldCom Inc. on Monday announced an agreement to acquire MFS Communications Co. for $14.4 billion in stock, creating a business-communications giant that stretches from phone lines to the Internet.
WorldCom, a Jackson, Miss.-based company that is the fourth-largest U.S. long-distance service carrier, will swap each share of MFS stock for 2.1 shares of WorldCom stock. Based on Friday's close of trading on Wall Street, the deal is worth about $14.4 billion or $55 per share.
The two companies said in a joint statement released early Monday morning that their deal is driven by an interest in saving money, capitalizing on MFS' recent $2 billion purchase of Internet access company UUNET Technologies Inc. and taking advantage of the recent congressional overhaul of telecommunications regulations.
MFS, based in Omaha, Neb., specializes in providing communications services to businesses and the government.
"Rarely in business do you have the opportunity to bring together the premier growth companies from key segments of an industry," WorldCom President and Chief Executive Officer Bernard J. Ebbers said. "We are creating the first company since the breakup of AT&T to bundle together local and long-distance services carried over an international end-to-end fiber network owned or controlled by a single company."
A final agreement, which is still subject to shareholder and regulatory approval, would create a combined company with annual revenue of about $5.4 billion and 500,000 business customers in North America, Europe and Asia, the companies said. Known as MFS WorldCom Inc., the merged company will have market capitalization of $23 billion and annual growth topping 30 percent. It will be able to provide local, long-distance and Internet access to customers globally.
The companies said Ebbers will become president and chief executive of the combined company, while MFS President and Chief Executive Officer James Crowe will become chairman after the merger. WorldCom will hold a majority of seats on the company's board of directors.