Verizon is buying a piece of MCI direct from Mexican billionaire Carlos Slim for $1.1bn to fend off competing bids for the company formerly known as WorldCom from Qwest Communications.
The 13 per cent stake cost Verizon slightly more than it is offering other MCI shareholders. By buying such a large slice of the firm Verizon makes it very difficult for Qwest to get back in the bidding.
But Qwest isn't quitting yet and the firm may launch a hostile takeover. Qwest criticised the deal for creating two classes of shareholders - Carlos Slim was paid more for his shares than other shareholders are being offered.
MCI has been at the centre of a bidding war for months - it accepted an offer from Verizon despite Qwest offering more cash.®