WorldCom, the US communications company, yesterday tabled the largest bid in the history of mergers and acquisitions, when it offered to pay $30 billion (£20.66 billion) for MCI Communications.
The unexpected all-stock offer looks likely to scupper British Telecommunications' agreement to buy MCI but could leave the British group with about 10 per cent of the newly-merged company. WorldCom said its offer, based on closing stock prices on Tuesday, represented a premium of $6 billion to the BT offer, and is pitched at $41.50 per MCI share.
The move was welcomed by WorldCom's strategic partner in the Irish market, TCL Telecom. A combination of WorldCom and MCI would create one of the world's premier telecommunications companies with more than £20.6 billion in revenues, according to Mr Sean Melly, TCL's chief executive.
TCL supplies telecommunications services to the corporate sector and is 30 per cent owned by WorldCom.
The terms of the BT deal were drastically cut in August after weeks of negotiations when MCI warned it would lose more than previously expected in its attempt to break into the local telephone market.
The deal represents a further step in the consolidation of the global telecommunications industry. It could herald further megamergers, as telecoms, Internet and other communications companies vie for a share of a global market which is being deregulated. Yesterday there was widespread speculation on Wall Street that AT&T, the largest US telecoms company, may be pushed into making an acquisition.
Mr Bernard Ebbers, president and chief executive officer of WorldCom, said the deal offered MCI shareholders "a higher price, a higher premium, and most importantly, a higher performing stock" than Concert - the company to be created through the BT merger. He described WorldCom and MCI as an excellent cultural fit, saying "our two companies are the paradigm for the American entrepreneurial spirit - we have both forged significant inroads into industries long dominated by giants."
WorldCom, the fourth-largest long-distance operator in the US, has expanded rapidly into local services, particularly for the financial community and the Internet, through a series of ambitious acquisitions. It is broadly believed among industry specialists to be the group best placed to take advantage of new technology and the world's rapidly liberalising telecoms markets.
MCI shareholders yesterday welcomed the news and hit out at BT's management for having cut the price they were willing to pay for the US telecoms company.
BT said only: "We have received the material made public today and are considering the issues it raises."
Salomon Brothers, the investment bank being taken over by Travelers Group, is advising WorldCom.
