MCI to look further into WorldCom bid
This is the first time MCI has met formally to consider the bid since WorldCom stunned Wall Street and BT 10 days ago with its unsolicited offer which topped BT's agreed $23bn bid.
However, MCI has not set a deadline for when it will decide which bid to recommend to shareholders. The WorldCom offer, which is entirely in the form of paper, values MCI at $41.5 a share. BT's cash and shares offer values MCI at around $34 a share.
MCI has appointed Lehman Brothers in New York to advise it on the WorldCom offer. It was already being advised on the BT deal by investment bankers from Lazard Freres.
"They [MCI's directors] now have a second adviser, and they will say they would like to be more informed," said Steven Cohen, research director at Kellner DiLeo, a New York arbitrage firm. "MCI is not in a position to turn these guys away. They accepted a 25 per cent reduction in consideration on behalf of their shareholders and here comes someone to make their shareholders whole."
Meanwhile BT and MCI announced they had completed a strategic link-up with Portugal Telecom. BT and MCI have paid pounds 74m for a 1.5 per cent stake in Portugal Telecom. The Spanish telecom operator, Telefonica, will take a 3.5 per cent shareholding.
Sir Iain Vallance, BT's chairman, said the shareholding underpinned the three-way alliance that it announced along with MCI and Portugal Telecom in April.
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