| M&A players: British Telecom and MCI Communications Value: $20 billion Announced: November 3 Investment bankers: Lazard Brothers, NM Rothschild, Morgan Stanley British Telecom has publicized its proposed merger with MCI Communications of the US as an exercise in lowering overheads and increasing global reach. But large numbers of shareholders may not wish to wait for the benefits to come through. A wave of post-merger selling is expected, especially from former MCI shareholders who have no interest in owning a foreign utility they consider only a rung up from a nationalized industry. The new company Concert will not appear in US indices, such as the S&P 500, giving US institutions another reason not to hold the stock. The prospect of a US shareholder backlash was what made MCI's investment banker Lazard Brothers push for a share buyback of up to 10%, something BT through its advisors NM Rothschild & Sons wanted to avoid. It was the major sticking point in intense negotiations between the companies that almost came to grief on several occasions. The other key issues were a dividend payment to BT shareholders that MCI shareholders will not receive; and the size of the cash portion of the offer made for MCI stock. |