ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, November 4, 1996 TAG: 9611040064
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
British Telecommunications is in talks to merge with MCI in a mammoth deal that could be worth $20 billion and rank as the biggest-ever foreign purchase of a U.S. company.
MCI Communications Corp. disclosed Friday that the talks were under way and said an announcement could come as early as Monday.
British Telecommunications PLC, the dominant phone company in Great Britain, already owns 20 percent of MCI, the No. 2 long-distance company in the United States. The other 80 percent of MCI stock is now worth about $16 billion and a source confirmed British Telecom would pay more.
Scott Wright, a telecommunications analyst at Argus Research Corp., figures with a premium for MCI shareholders, the deal would be worth at least $20 billion. ``That could be a floor,'' he said.
It is possible the deal could be structured as something other than an outright purchase, a ``merger of equals'' for example, but no specific information was available. The two sides are looking at a cash and stock transaction, said the source, who has knowledge of the deal and spoke on condition of anonymity. The terms were not disclosed.
``If this is a real deal, this clearly is going to have an influence on the balance of power in the U.S.,'' Wright said. ``I think that AT&T has got to take very seriously this kind of potential capital infusion for MCI.''
A combined BT-MCI, with about $35 billion in annual revenue and a reach that spans the globe, would be a powerful rival for AT&T Corp., the world's biggest long-distance company. AT&T had revenue last year of $50.7 billion, excluding the NCR Corp. computer operations it plans to divest.
AT&T said it was ``confident that any such deal would get the scrutiny it deserves'' from regulators, and that federal approval would come only with ``the complete opening of the British telecom market.''
LENGTH: Short : 42 linesby CNB