Verizon Communications Inc. and MCI, Inc. this week announced that Verizon has agreed to acquire MCI for $4.8 billion in equity and $488 million in cash.

The transaction adds new strength to the telecommunications services both companies provide. It ensures that consumers and businesses will have a supplier with the financial strength to maintain and improve MCI's Internet backbone network, which is the largest in the world based on company-owned points of presence.

The Boards of Directors of both companies have approved the agreement.

MCI shareowners will receive 0.4062 shares of Verizon common stock for each common share of MCI. This is worth $4.795 billion and equivalent to $14.75 per MCI share, based on Verizon's closing price on Friday, Feb. 11. MCI shareowners will also receive $1.50 per MCI share in cash, worth $488 million. This consideration is subject to adjustment at closing and may be decreased based on MCI's bankruptcy claims-related experience.

In addition, MCI will pay its shareowners quarterly and special dividends of $4.50 per share, worth $1.463 billion. This includes a 40-cent-per-share quarterly dividend approved by the MCI Board on Friday, Feb 11. In total, the transaction values MCI shares at $20.75 a share, or $6.746 billion.

Verizon will assume MCI's net debt (total debt less cash on hand), targeted to be approximately $4 billion at closing, and customary closing conditions will apply. In addition to MCI shareowner approval, the acquisition requires regulatory approvals, which the companies are targeting to obtain in about a year.