- The Washington Times - Thursday, October 6, 2005

From combined dispatches

MCI Inc. shareholders voted overwhelmingly yesterday to approve an $8.4 billion acquisition by Verizon Communications Inc., despite some lingering shareholder resentment over the company’s rejection of a higher bid.

At a meeting at the company’s headquarters in Ashburn, Va., stockholders voted 210 million shares in favor of the acquisition, with 28 million shares opposed.

The votes in favor represent 64 percent of all 326 million outstanding shares and 88 percent of all votes cast. A majority of all outstanding shares were needed to approve the merger.

A Minnesota hedge fund, Deephaven Capital Management, had solicited votes against the merger. But the movement never gained ground as Denver company Qwest Communications International Inc. withdrew its higher bid of $9.85 billion earlier this year and refused to resubmit it.

Deephaven did not immediately return calls yesterday.

About 100 people attended the meeting, which lasted about 10 minutes. No one spoke for or against the merger.

The acquisition still needs approval from state and federal regulators, including the Justice Department and the Federal Communications Commission. The two companies hope to close on the deal by early next year.

“This vote of support by our shareholders represents a key milestone in the merger approval process,” said Michael Capellas, MCI president and chief executive officer. “The combined company will have the strength and assets necessary to be a competitive force in today’s transforming communications marketplace.”

Verizon Chairman and Chief Executive Officer Ivan Seidenberg said, “Today’s vote brings us an important step closer to completing the MCI transaction. We look forward to creating a company that is better able to compete in today’s large business and government marketplace.”

Verizon, with 2004 revenue of $71.3 billion, will take another look at shedding some of its 54 million phone lines after completing the MCI purchase, analysts said. Verizon said last year it may sell or spin off 10 million to 15 million lines that provide local calling and put that plan on hold after making a bid for MCI.

Mr. Seidenberg is exiting declining businesses such as residential local phone service to devote resources to growing operations including wireless data and high-speed Internet access.

Verizon must determine how MCI assets fit in before moving forward with a sale of lines, Chief Financial Officer Doreen Toben said in May.

Earlier this year, Verizon and Qwest fought for MCI, which became an attractive acquisition target after shedding much of its debt in bankruptcy reorganization while retaining an extensive customer base of Fortune 500 companies.

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