Management Questions

Who were the parties in the negotiation?

The parties in the negotiation we role played were:

(1) Verizon Communications

(2) MCI Communications

(3) Qwest Communications

Verizon Communications Inc. is one of the world's leading providers of communications services with more than $71 billion in annual revenues. Verizon has a diverse work force of more than 210,000 in four business units: Domestic Telecom serves customers based in 29 states with wireline telecommunications services, including broadband, nationwide long-distance and other services. Verizon Wireless owns and operates the a nation wide wireless network, serving 43.8 million voice and data customers across the United States. Information Services operates directory publishing businesses and provides electronic commerce services. International includes wireline and wireless operations and investments, primarily in the Americas and Europe. (Fisch, 2005)

MCI, Inc. (NASDAQ:MCIP) is a global communications provider who provides advanced communications connectivity to businesses, governments and consumers. The have the benefit of owning their global data networks which made them attractive for acquisition in the first place. Additionally they have over 10,000 large business clients allowing Verizon immediate expansion of their client base. (Fisch, 2005)

Qwest Communications International Inc. is a Denver based company which provides voice, video and data services and employs more than 40,000 employees. (Qwest.com, 2005)

What was the final outcome?

After a difficult battle with Qwest, Verizon Communications Inc. announced it had agreed with MCI, Inc. to amend the terms of the agreement to acquire MCI. The MCI Board of Directors is recommending approval of the amended agreement to its shareholders. The aggregate cost of the acquisition stands at $8.5 billion. Verizon will acquire MCI for $23.10 per MCI common share, not including the 40 cents per share cash dividend recently paid by MCI to its shareholders. MCI’s shareholders will receive $23.50 per share including the recent 40- cent dividend.

Under the revised agreement, MCI shareholders will receive total cash of $8.35 per share of MCI common stock. This represents up to $5.60 per share in special cash dividends (not including the 40 cents per share recently paid by MCI) and $2.75 per share in cash consideration. Verizon increased the cash