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MCI deal clears one hurdle
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March 11, 1998: 5:53 p.m. ET
Shareholders approve $37 billion merger at two separate meetings
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NEW YORK (CNNfn) - WorldCom Inc. and MCI Communications Corp. moved one step closer to completing their $37 billion mega-merger.
Shareholders at WorldCom's headquarters in Jackson, Miss., and MCI holders in South Sioux City, Neb., have overwhelmingly voted in favor of the merger.
MCI spokesman Frank Walter said 80 percent of the company's shareholders voted in favor of the deal while less than 1 percent voted in opposition, based on preliminary figures.
WorldCom shareholders cleared the proposed deal by a 78 percent margin. The companies expect to close the deal in mid-year 1998.
"As we move closer to the completion of the merger with WorldCom, the synergies and growth opportunities become increasingly clear," said Bert C. Roberts Jr., MCI chairman.
To be sure, the merger is still subject to U.S. and European regulatory approvals. And the U.S. Department of Justice has widened its probe into the merger's impact on competition on the Internet.
Competitors have complained the merged entity would control more than half of the Internet capacity in terms of revenue. However, the companies have argued that they would control only 20 percent of the overall market.
Analyst generally tend to believe the companies' assertion. Although Boston-based consulting firm Yankee Group estimates the combined entity will control between 50 and 60 percent of the traffic on the Internet, consumers still will be shielded from its effects.
"Just in terms of whether or not this is a competitive environment, we believe it is still a competitive industry. You have plenty of other telecommunications companies," said Joe Bartlett, analyst at Yankee Group.
Bartlett said consumers eventually may benefit from the merger as WorldCom's UUNet Technologies subsidiary gets more favorable pricing.
Separately, both companies have unveiled a 17-member board that consists of 11 outside members and includes America Online Chairman and Chief Executive Steve Case.
Eight of the outside directors are designated by WorldCom and three by MCI. The board also will include six officers.
Along with Case, WorldCom's selections include: James C. Allen, former chief executive of Brooks Fiber Properties; Carl J. Aycock, director of Master Corp.; Max E. Bobbitt, president and chief executive of Metromedia Asia Corp.; Francesco Galesi, chairman of Galesi Group; Stiles A. Kellett Jr., chairman of Kellett Investment Corp.; John Porter, chairman of Integra Funding and Industrial Electric Manufacturing Inc.; and Lawrence C. Tucker, partner at Brown Brothers Harriman & Co.
MCI's selections include: Clifford L. Alexander Jr., president of Alexander & Associates Inc.; Judith Areen, Dean of Law Center at Georgetown University; and Gordon Macklin, chairman of White River Corp.
Roberts and Bernard J. Ebbers, chief executive of WorldCom, also are included on the slate of 17 directors.
-- from staff and wire reports
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