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Archive for Thursday, June 28, 2001

Sprint’s failed merger lands company in court

June 28, 2001

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— A law firm has filed a second suit against Sprint Corp. over its failed merger with WorldCom Inc.

The 64-page complaint was filed late Monday on behalf of Sprint shareholder New England Health Care Employees Pension Fund by Milberg Weiss Bershad Hynes & Lerach. The firm is one of the nation's most prolific filers of securities fraud lawsuits.

Milberg Weiss had sued Sprint last year in state court. The new lawsuit is filed in federal court in Kansas City, Kan.

The complaint is based on the same underlying events as the lawsuit Milberg Weiss filed last December in Jackson County, Mo., Circuit Court on behalf of a New York bank. The Jackson County action alleges violations of state law, while the federal court action alleges violations of federal securities laws.

Sprint officials declined to comment on the federal lawsuit. But they have denounced the Jackson County action as frivolous and moved to dismiss it. Circuit Judge Charles Atwell has scheduled an August hearing on the motion.

Both lawsuits allege that before the WorldCom merger agreement was reached, Sprint's board of directors secretly altered the terms of its stock option plan so Sprint executives could cash in on lucrative options even if the merger fell through.

Sprint insists it was committed to the merits of the merger and, contrary to the allegations in the lawsuits, was confident it would be completed.

Antitrust regulators blocked the $129 billion deal after raising concerns about its anti-competitive effects. The merger would have combined WorldCom, the second-largest long-distance carrier in the United States, with Westwood-based Sprint.

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