Summary:

Well here we go again! On any slow news day the rumors of an MCI buyout are enough to get the talking heads on bubble vision work up a frenzy. This time around, however there might be some element of truth to them. Several news sources […]

Well here we go again! On any slow news day the rumors of an MCI buyout are enough to get the talking heads on bubble vision work up a frenzy. This time around, however there might be some element of truth to them. Several news sources report that Leucadia National Corp., which also owns WilTel Communications Group (formerly known as Williams Communications), is seeking regulatory clearance to buy a majority of MCI’s shares. Buying out half of MCI could cost Leucadia about $2.7 billion sans premium. “A WilTel/MCI combination would not produce meaningful synergies for the two companies, nor would it improve the overall industry pricing environment, in our view,” said Blake Bath, analyst with Lehman Brothers wrote in a note, reports Light Reading. Telephony magazine reports:

Leucadia’s investment in WilTel could also present a problem. As a backbone carrier, WilTel competes with MCI, though on a much smaller scale, and an acquisition would pit the two companies against one another. Patrick Guzman of Guzman and Co. postulated that Leucadia may have started a long-awaited bidding war for MCI. Because of poison pill provisions written into MCI’s bylaws to protect against a hostile takeover, Leucadia would have much difficulty buying 50% of MCI’s stock outright.

My two cents: why would anyone buy this piece of crap which is swirling down the toilet, and has lost traction with most corporate customers.

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