Verizon has agreed to acquire MCI in a deal valued at $6.7 billion, the companies announced Monday, ending weeks of speculation about a likely deal.

Verizon said the acquisition would accelerate its plans to become a significant player in the enterprise services market, giving it a broader reach globally, a suite of advanced IP-based services and a large base of business and government customers.

“This is a transaction that is focused on the strengths of both companies' core business… and will drive signficant operational efficiencies and at the same time create opportunities for growth,” says Ivan Seidenberg, Verizon's chairman and CEO.

Michael Capellas, president and CEO at MCI echoed Seidenberg’s views and went on to say, “From a customer perspective, the overwhelming theme is that customers want to have simplified delivery, one-stop shopping and a single point of contact."

Getting regulatory approval for the deal is likely to take as much as a year, the companies said. Verizon must also win the approval of MCI's shareholders. The boards of directors at both companies have approved the agreement, they said in a statement. The Department of Justice, the FCC and several state public utilities commissions must also approve the deal.

Getting regulatory approval for the deal is likely to take as much as a year, the companies said. Verizon must also win the approval of MCI's shareholders. The board of directors at both companies have approved the agreement, they said in a statement.

Verizon will pay $4.8 billion in shares and $488 million in cash to buy MCI. MCI, meanwhile, will pay its shareowners quarterly and special dividends of $4.50 per share, worth $1.46 billion, bringing the total value of the deal to $6.7 billion, the companies said.

Ivan Seindenberg, Verizon's chairman and CEO, called the deal "a natural and logical extension of Verizon's strategy to transform our company to serve growth markets and offer broadband technologies."

The companies will figure out their branding strategy, organizational structure and other details closer to the completion of the deal, they said. Verizon will take on MCI's net debt when the deal closes, projected to be about $4 billion.

The companies plan to lay off about 7,000 employees after the deal closes, including IT workers, engineers, sales staff, human resources, legal and corporate support staff. Verizon anticipates savings of $500 million in the first year of the deal, and $1 billion a year in the third year and later. Savings will come from job cuts, an IT overhaul at MCI and real estate consolidation, said Doreen Toben, chief financial officer at Verizon.

Verizon also expects to save $100 million annually by bringing its long distance traffic on to MCI’s network alone. Today Verizon works with a number of providers to support its long distance traffic.

The IDG News Service is a Network World affiliate.