Verizon to buy phone firm MCI for $6.75bn

Verizon Communications is to buy long-distance telephone company MCI in a deal worth $6

Verizon Communications is to buy long-distance telephone company MCI in a deal worth $6.75 billion to give Verizon entry into the market serving large corporations.

The deal gives Verizon, the largest US telecommunications company, the muscle to compete against SBC Communications following its deal to acquire AT&T for $16 billion.

It also spells the end of the independent long-distance telephone business in the United States, with local telephone companies such as Verizon and SBC firmly in control of their one-time rivals.

The purchase by Verizon, which beat out rival bidder Qwest Communications International, includes an exchange of stock valued at $4.8 billion, based on Friday's closing prices, and $488 million in cash.

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MCI will also pay out dividends totalling nearly $1.5 billion, bringing the total value to $6.75 billion, or $20.75 a share.

The boards of both companies have approved the merger, which also needs approval from MCI shareholders and market regulators that the companies hope to obtain in about a year.