RealTime IT News

Is a Hostile Qwest Afoot?

MCI has rejected the latest takeover bid from Qwest , citing "uncertainties" surrounding the Denver regional carrier's $8.9 billion offer.

Instead, the Ashburn, Va., long-distance and network services provider remains committed to Verizon's $7.6 billion merger plan.

Questions about Qwest's synergy estimates, ability to close the deal and Long-term financial prospects were among the reasons for shunning the higher bid, MCI said.

"In the face of these risks, MCI was not willing to jeopardize the certainty of its Verizon agreement for the uncertainties surrounding the Qwest proposal," the company said.

Qwest, which has heaped scathing criticism on MCI directors in recent weeks, hinted that it may take its case to MCI shareholders.

"We are confident that our offer is superior, and statements of support from many MCI shareowners indicate that they are in agreement with us," Qwest said in a statement. "Qwest will allow shareholders to dictate the next steps."

Several MCI stakeholders were unhappy with MCI directors' reluctance to consider previous offers from Qwest. Carlos Slim, MCI's largest shareholder with a nearly 14 percent ownership stake, reportedly said both Verizon offers, as well as Qwest's earlier bid, were too low.

Denver-based Qwest also reportedly hired The Altman Group, a New York proxy consulting firm, which could help it launch a takeover attempt.

"They have put in place everything they need to try a hostile takeover," Clifford R. Holliday, president of telecom consulting firm B & C Consulting Services, told internetnews.com. "Would one succeed here? I am not sure, but one certainly does hear a lot about the dissatisfaction of major stockholders of MCI."

With a wave of consolidation sweeping the telecom industry, Qwest may feel that its options are limited if it doesn't succeed in winning the MCI sweepstakes, Holliday said.