WorldCom Inc. said Tuesday that MCI Communications Corp. agreed to use anti-takeover provisions to block competing offers and protect WorldCom’s $37 billion purchase agreement.
WorldCom on Monday agreed to buy MCI for $51 a share in stock and cash, topping a competing offer from GTE Corp.
British Telecommunications PLC, which owns 20 percent of MCI, also agreed to block any competing bids through Sept. 30, when its right to do so expires.
MCI and BT’s commitment to support WorldCom’s offer will make it much more difficult for another suitor to take over MCI and will increase the likelihood that GTE won’t increase its bid, analysts said.
“It’s a testimony to how serious MCI and WorldCom are to getting these transactions completed,” said Tom Burnett, founder of Merger Insight Inc., which tracks mergers and acquisitions.
GTE isn’t planning to raise its $33 billion bid to match WorldCom’s sweetened offer, according to a source. GTE will watch WorldCom’s stock performance to see if there’s a chance to re-enter the bidding, the source said.
WorldCom is paying stock to MCI shareholders other than BT, which will receive $51 a share in cash for its stake. WorldCom also agreed to pay BT $465 million to end the British firm’s competing purchase agreement with MCI.
