Leucadia to Request Approval to Buy Control of MCI

Byline: Christopher Stern

Leucadia National Corp., a New York-based holding company, is requesting antitrust clearance to acquire 50 percent or more of MCI Inc.'s stock, the telecommunications giant announced this morning.

Leucadia has not made an offer for MCI but it has informed the Ashburn-based company that it plans to seek approval from the Federal Trade Commission and the Justice Department to acquire 50 percent or more of its common stock, a necessary step before any large transaction can occur.

Leucadia has a diverse group of holdings including stakes in telecommunications, real estate and gold mining. Its telecommunications holdings include WilTel Communications Inc. and ATX Communications Inc.

MCI, which emerged from bankruptcy last April, has been struggling in an intensely competitive telecommunications industry. When the company completed the bankruptcy process, its common stock was valued at $25 per share. Last Friday, shares of MCI closed at $14.37.

MCI shares are not currently listed on any of the major stock exchanges. However, MCI has applied to be listed on NASDAQ and could begin trading on the electronic exchange by the end of the week, according to MCI spokesman Peter Lucht.

MCI issued only a one-paragraph statement announcing Leucadia's intention to seek regulatory approval to acquire the large stake in long distance giant. The company had no other comment. Calls to Leucadia were not returned.

Many analysts have been looking forward to industry consolidation as a way of easing an intense price war between carriers. But even though Leucadia owns two other telecommunications companies, a potential takeover of MCI is not likely to affect the highly competitive landscape, said Drake Johnstone, a telecommunications analyst with Davenpost & Co.

He noted that two of the largest players -- SBC Communications Inc. and BellSouth Corp. -- are already distracted by the proposed merger of Cingular Wireless and AT&T Wireless. Cingular is a joint venture of SBC and BellSouth. Verizon, now the nation's second largest long distance company, would face tough antitrust review if it sought to acquire MCI, the nation's third-largest long distance carrier.

"Just combining MCI with two weaker players is not going to move the needle," Johnstone said.

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