WorldCom, Sprint Call Off Merger
N E W Y O R K, July 13 -- WorldCom and Sprint called off their planned $129 billion telecommunications merger today in the face of extreme opposition from regulators in the United States and Europe.
In a statement, the companies said that “the set of conditionsultimately demanded by the U.S. Department of Justice wouldcompromise the customer and financial benefits of the merger.”
Late last month, Attorney General Janet Reno announced theJustice Department was suing to block the deal. WorldCom and Sprintthen pulled their merger application in Europe, although it too wasultimately rejected.
DOJ: Americans Would Pay More
The Justice Department contended that the merger of the second-and third-largest long-distance carriers would leave millions ofAmericans paying more for less service.
Mario Monti, competition commissioner for the Europeancommission, had said the merged company would sharply reducecompetition for Internet connections.
Both companies had been widely expected to drop their mergerproposal, and in fact had been hinting at it for the past severaldays.
At a wireless communications conference Tuesday in New Orleans,WorldCom president and chief executive Bernard Ebbers was asked ifhe had anything to report on the merger and whether it was stillmoving forward.
“No,” Ebbers said. “I don’t think there is much left to discuss.”
Litigation Not a ‘Realistic Alternative’
Sprint called the failed deal “an exceptional opportunity tocreate a broad-based international competitor.”
“While we disagree with the conclusions reached by the JusticeDepartment on the competitive impact of the merger, litigation ofthose conclusions in federal court is not a realisticalternative,” the Westwood, Kan.-based company said.
Both Sprint and the Clinton, Miss.-based WorldCom said theDepartment of Justice had informed them it would not be able to goto trial before January 2001. Even if the companies were successfulin that trial, approval by the Federal Communications Commissionand the European Commission would still be needed — and that delaywas too much.
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