Article Abstract:
British Telecommunications and Cable and Wireless ceased five months of deliberations towards a merger as a result of regulatory and financial problems. The merger would have yielded a telecommunications giant with around 180,000 global employees and nearly 20 billion pounds sterling of annual turnover. The American Depository Receipts of British Telecom fell $3 to $51.375 and Cable & Wireless dropped $2 to $21.125 in the NYSE after the shocking announcement of a second failed merger agreement. The combined companies would have created the fifth largest communications firm in terms of revenue. Since both companies are active globally, their merger required approval from various governments, which was not happening with any timeliness. Forfeited on account of extreme difficulties, the merger would have resulted in such benefits as a strong presence in the Honk Kong telecommunications market.
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Article Abstract:
British Telecommunications (BT) said that it would pay around $19 billion for the remaining 80% of MCI. The new amount represents an approximate $5 billion drop from the telecommunications companies' late 1996 merger price of $24 billion. BT, which owns the other 20% stake in MCI, claims MCI's value has plummeted 22% since the original acquisition agreement. Both companies' shareholders will vote on the revised deal later in 1997. MCI shareholders approved the original merger by a 3-to-1 margin in spring 1997, but many analysts much lower support in the next MCI vote. The revised deal's terms call for MCI stockholders to exchange one MCI share for 0.375 of a BT American depository receipt (ADR) and $7.75 in cash, worth around $33.32 per share of MCI. This compares to the original deal terms of one MCI share for 0.54 of a BT ADR and $6 in cash, amounting to around $42.82 per share of MCI.
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Article Abstract:
MCI announced possible revisions of its merger with British Telecommunications (BT), while the FCC approved the international transaction. The stunning MCI disclosure raises speculation about whether BT will follow through on its acquisition plans. Questions also are swirling around MCI, which ranks second among US long-distance carriers. Analysts believe that BT would pay 10% to 25% less than the $23.4 billion deal's original terms. Merger problems began in mid-July 1997, when MCI warned shareholders that its efforts to enter the local phone business could create 1997 losses of up to $800 million. This announcement surprised BT executives, who according to company insiders began to discuss renegotiations of the MCI acquisition. Merger revision talks might inflame tensions between BT and MCI management, and possibly kill the deal.
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