The Verizon-MCI Merger

            
 
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Case Details:

Case Code : BSTR259
Case Length : 19 Pages
Period : 2000-07
Pub Date : 2007
Teaching Note :Not Available
Organization : Verizon, MCI
Industry : Telecom
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Strategic Management Formulation, Implementation, & Control, 12e

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Excerpts Contd...

Post Merger Integration

In January 2006, Verizon and MCI closed the merger deal valued at US$ 8.5 billion.

The shareholders of MCI received 0.5743 shares of Verizon for each share of MCI held along with additional cash of US$ 2.738 per MCI share. To achieve the synergies from the merger with MCI, Verizon expected to incur costs of US$ 1.5 billion in expense and US$ 2 billion in capital. On the merger, Seidenberg said, "This milestone for Verizon creates a new competitive force with the power of the global MCI network, and the reach of Verizon's broadband and wireless networks in the United States. Our added network capabilities and strong customer relationships provide a solid foundation for innovative and integrated wireless, wireline and multimedia services designed to meet customer demands for speed, mobility and control."

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After the merger, Verizon operated through three business units: Verizon Business; Verizon Wireless, which was a mobile operator; and Verizon Landline operations, which included broadband operations (Refer Exhibit V for Verizon's business segments after merger with MCI)...

The Road Ahead

Financial experts appreciated Verizon's move to acquire MCI through a combination of stock and cash without incurring any debt. Senior personnel at Verizon were of the view that the merger had provided the company financial stability.

According to Gofus, "The newly combined companies are all more financially stable and the whole uncertain future question is just gone. If you're a global company, you need to know your partner is going to be there for the long haul and not be concerned about who's going to buy them."...

Exhibits

Exhibit I: History of Telecommunications Industry in the US
Exhibit II: Verizon's Business Segments before Merger with MCI
Exhibit III: SBC-AT&T Merger
Exhibit IV: Key Benefits of Verizon-MCI Merger
Exhibit V: Verizon - Post Merger Business Segments
Exhibit VI: Verizon's Stock Price Chart (June 2004 - May 2007)
Exhibit VII (A) and (B): Verizon - Selected Financial Data
Exhibit VIII (A): US Business Market Share - Telephone & Data Services
Exhibit VIII (B): US Consumer Market Share - Local & Long Distance


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