The battle for control of MCI Corp is so closely poised that analysts are waiting this week for the first new initiative to break the deadlock. As things stand, the issue facing MCI shareholders is a share offer currently worth $41.50 from WorldCom Inc compared with a cash bid of $40 for GTE Corp. WorldCom’s bid is vulnerable should its share price fall while GTE’s own share price has dipped on fears of the level of debt it will assume if it is successful. What would bolster the GTE bid would be a move from British Telecommunications Plc whose initial agreement to buy MCI sparked the current auction. Most observers expect BT, which has far more to gain from a successful GTE bid, to help break the deadlock by offering to put part of its enormous cash reserves into the merged company. With an existing 20% stake in MCI, it would further boost its stake in the US market – the reason for its move for MCI in the first place – and relieve GTE of its debt problems. But while the official WorldCom position is that its shares have a far better track record than those of its rivals, analysts expect that it will eventually be forced to improve its offer if it is to see of the GTE bid. Either way, the battle for control of MCI still has a long way to run and the bids are sure to go higher.
