| The $140 billion merger between MCI WorldCom and Sprint will likely go through once moderate modifications are made, analysts say, despite reported objections to the deal by the U.S. Department of Justice.
A published report said the agency’s staff recommended that the department turn thumbs down on the deal, citing concerns that the two companies, which combined would have more than 40 percent of long-distance traffic and 65 percent of backbone traffic, would dominate both arenas if the merger was approved.
“The Department of Justice’s staff opposition to this merger is neither a surprise nor the end of this process,” said Lehman Bros. analyst Kim Wallace. “We believe if the company identifies qualified buyers of Sprint’s long-distance residential and Internet backbone assets, the department likely would decide to not challenge the proposed combination.”
As for divesting certain assets, an MCI WorldCom spokesman said spinning off Sprint’s Internet backbone “has always been on the table.” No other remedies have been discussed with the agency. MCI WorldCom, the spokesman added, remains confident that the deal ultimately will be approved later this year. |
