Qwest resumed its dogged pursuit of MCI
today, increasing its offer for the long-distance carrier and network services
provider approximately $500 million to nearly $9 billion.
Qwest CEO Richard Notebaert presented the terms in a letter to MCI Chairman
Nicholas Katzenbach. He also expressed “dismay” that MCI accepted a
$7.67 billion bid from Verizon before checking back with
Qwest.
“It is difficult to understand how the goal of maximizing value for MCI
stockholders is served by consistently favoring one bidder over another,
especially since it has only been our persistence, rather than a level
playing field, that has significantly increased the value of MCI shares,”
Notebaert said.
Notebaert said Qwest remains committed to a merger with MCI. He believes its
proposal is superior on price, synergies and ease of regulatory approvals
compared to Verizon’s merger plan. Notebaert said the latest offer was good
until April 5 at midnight.
MCI, of Ashburn, Va., has been cool to Qwest, citing concerns about its
financial stability. And the pact it entered into with Verizon this week
makes it harder to drop that deal. If MCI backs out, it will have to pay the
regional carrier a $240 million break-up fee.
Approaching MCI stockholders directly could be another option for Qwest.
Several large MCI stakeholders were unhappy with directors’ reluctance to
consider previous offers from Qwest.
A spokesman for Carlos Slim, MCI’s largest shareholder, told Reuters that
both Verizon offers and Qwest’s earlier bid were both too low. Slim holds 13.7
percent of MCI shares.
Denver-based Qwest has also reportedly hired The Altman Group, a New York
proxy consulting firm, which could help it launch a hostile attempt.
Qwest and Verizon covet MCI because of its large IP data-service deals with
government agencies and corporations. And with the pending merger of SBC
and AT&T
, neither wants to be left behind by
the wave of industry consolidation.
The Baby Bells consider those long-term, high-margin contracts crucial to
their future prosperity, as cable operators, VoIP upstarts and wireless
carriers try to hone in on their traditional businesses.
