Boards of MCI, British Telecom Reach Agreement on Merger Deal

NEW YORK — The boards of British Telecommunications and MCI Communications Corp. reached agreement Saturday on a merger deal, with the overseas phone giant acquiring America’s No. 2 long-distance company for as much as $21 billion.

The boards agreed on a cash-and-stock transaction worth between $36 and $38 a share, according to sources speaking on condition of anonymity. At $38, the deal would be worth $21 billion. At $36 it is about $1 billion less.

A final proportion for the cash and stock wasn’t clear, although at one point the boards were considering payment of 60% cash for the MCI shares. The company has 690 million shares outstanding, including those held by British Telecom, which already owns 20% of MCI.

Under the agreement, MCI would continue to operate under its name and keep a headquarters in Washington. British Telecommunications is based in London.

Messages seeking comment from BT officials were not immediately returned. MCI spokeswoman Jonelle Birney declined to comment.

A formal announcement of the merger is to be made at news conferences today.