FRAMINGHAM (04/28/2000) - Government agencies may be putting MCI WorldCom Inc. and Sprint Corp. through the wringer on their proposed merger, but the companies are getting support from one group: their shareholders.
Both company's shareholders Friday approved the fusion by wide margins at special meetings. Some 98 percent of MCI WorldCom shares voted at the meeting were yes votes. The percentage at the Sprint meeting was 96 percent.
Abstentions alter the picture slightly. For example, the Sprint yes votes actually represent 61 percent of the total amount of Sprint shares withstanding, since some shares eligible to vote weren't represented in person or by proxy. For the merger to be approved, more than 50 percent of those potential votes overall needed to be cast in favor of the merger.
MCI WorldCom CEO Bernard Ebbers touted the shareholder vote as a key show of support for the company's strategy. "It indicates the importance shareholders place in positioning the company to compete successfully in what is now an 'all-distance' wireline, wireless and broadband communications market."
The two companies have emphasized the combination of assets in two areas where MCI WorldCom and Sprint have diverged in the past. For example, MCI WorldCom has extensive big-city local fiber while Sprint doesn't. By contrast, Sprint has extensive wireless PCS coverage and MCI WorldCom doesn't. The combination offers the possibility of a complete, end-to-end bundled offering to businesses and consumers erasing outdated distinctions between local and long-distance, merger supporters say.
By contrast, merger opponents have stressed the large overlap in the two companies' consumer and business long-distance and Internet backbone operations. The two companies are considered unlikely to merge without spinning off some of their businesses. The two have indicated that they would be willing to offload Sprint's Internet businesses. Critics have demanded that much more go, potentially including Sprint's consumer long-distance, frame relay and ATM offerings.