A unit of MCI WorldCom will make a cash offer for the complete acquisition of OzEmail in a deal expected to challenge the Australian Internet service provider's most significant competitor, Telstra.
The US-based telco giant yesterday announced its wholly-owned subsidiary UUNET Holdings Australia will offer to buy all the issued ordinary shares of OzEmail for $3.55 a share.
MCI WorldCom has already purchased 14.9 per cent of the Australian ISP or 21.9 million newly issued ordinary shares at $3.23 a share, the company said.
OzEmail spokesperson Michael Ward told said the company expected the move, indicating it strengthens MCI WorldCom's existing entry into the local telecommunications market.
"MCI wants to make a substantial foray into this market and they see this as an important step," he said. "The directors have indicated it is a reasonable offer."
However, Ward said the executive will not make any formal recommendation to shareholders until they have read a formal proposal for the complete acquisition of OzEmail expected shortly.
Ward said the immediate benefit to local users is the availability of more Internet bandwidth courtesy of MCI WorldCom's international backbone, indicating it strengthens its stand against Telstra.
"Our competition is Telstra, that's the way it sits right now," he said.