WASHINGTON — Muscling into the biggest takeover battle in history, GTE Corp. offered $28 billion in cash Wednesday for ownership of long-distance giant MCI Communications Corp.
The combination of GTE and MCI would create a telecommunications behemoth with $40 billion in annual revenue and a network that would reach 24 million long-distance and 21 million local customers.
The deal would give GTE the broadest geographic base in the industry, positioning it at the forefront of the booming telecommunications industry, at the same time it has moved aggressively to grab a share of rapidly expanding Internet business.
GTE's bid comes two weeks after little known Jackson, Miss.-based WorldCom Inc. offered a $29.4-billion stock swap for MCI and an even earlier bid of $20.3 billion in stock and cash from London-based British Telecom.
After saying little about the bidding war around it in recent days, MCI issued a terse statement late Thursday that it would "review all issues and options" involving the competing offers. Some analysts, however, believe the firm may prefer the GTE cash offer, worth $40 per share, to WorldCom's stock.
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GTE would have to borrow massively to afford the deal, though executives denied that the purchase would leave the firm overburdened with debt. As word of the deal leaked out Wednesday, GTE stock fell $2.18 to $48, while MCI shares rose $1.56 to $36.87.
If GTE, headquartered in Stamford, Conn., succeeds in acquiring MCI, the deal would rank as the largest cash deal in history, eclipsing RJR Nabisco Inc.'s $25-billion sale in 1989.
GTE Chairman Charles R. Lee confirmed that his firm was making the offer after stock markets closed Wednesday, saying in a letter to MCI Chairman Bert C. Roberts that it would "bring the benefits of competition to all markets and all customers, both nationally and globally."
Until recently, GTE, an old-line phone company founded 79 years ago in Wisconsin, had been widely regarded as a slow-moving and lackluster performer in an industry full of mavericks, such as WorldCom. A merger would force GTE to accommodate the flashier, more entrepreneurial style of MCI, whose in-your-face marketing campaigns have provoked scores of industry rivals.
"GTE is not the quickest company to the draw," said Mark Warner, a telecommunications venture capitalist who ran unsuccessfully for the U.S. Senate in 1996. "If there wasn't the WorldCom offer blazing the trail, I doubt if they would have made a bid for MCI. . . . They usually operate in a more cautious mode."
