Sprint Corp has accepted a takeover bid worth a total of US$129 billion from rival MCI WorldCom, setting the world's largest-ever corporate merger, financial and industry sources familiar with the deal said.
The bid is worth US$76 per share, or US$77 billion, for the shares representing only Westwood, Kansas-based Sprint's core telephone long-distance business.
The US$115 billion price tag on that part of the deal includes the equity portion of the long-distance business of Sprint, the US' No. 3 long-distance telephone company, as well as its PCS Group subsidiary, which trades as a separate tracking stock, the sources said.
MCI WorldCom will assume US$14 billion in Sprint debt and preferred stock. The deal also includes a mechanism called a "collar" to protect Sprint from volatility in MCI WorldCom's stock price.
The deal came together after MCI WorldCom, the second biggest US long-distance telephone company, sweetened an earlier offer following a rival bid fromAtlanta-based BellSouth, the sources said.
The deal is expected to undergo intense regulatory scrutiny.
The union of the two powerful companies will create a formidable competitor to industry leader AT&T and would control about 32 percent of the US long-distance telephone market.
It is the latest blockbuster deal for MCI WorldCom boss Bernard Ebbers, who stunned the telecoms industry by engineering WorldCom's US$40 billion acquisition of MCI, which closed in Sept. 1998.
The deal eclipses Exxon's planned US$80 billion purchase of rival Mobil and the US$72 billion deal between Baby Bell operators SBC Communications and Ameritech. Both of those deals are still undergoing regulatory scrutiny.
MCI WorldCom also has agreed to pay a US$5 billion premium to acquire the PCS wireless unit, the sources said. The premium consists of additional shares of WorldCom worth 0.1547 of a WorldCom share, or about US$11, for each PCS share.
The Sprint board voted to accept the offer after a late Monday meeting to discuss the MCI WorldCom and BellSouth bids.
The management structure of the combined company could not immediately be determined. It also was not clear if Sprint executives would be given seats on the MCI WorldCom board.
MCI WorldCom had been negotiating a deal with Sprint for weeks, but the potential transaction between the two became complicated over the weekend when BellSouth stepped into the fray with a cash and stock bid of its own. That prompted a increased offer from MCI.WorldCom.
It was not immediately clear if BellSouth would now remove itself from the bidding contest. Also unclear was the future role of Deutsche Telekom AG and France Telecom, each of which hold a 10 percent stake in Sprint.
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