Frontier to Weigh Qwest Offer Against Global Crossing’s
Frontier Corp., a small local and long-distance phone company, said Wednesday it has agreed to meet with executives from Qwest Communications International to explore the company’s $11.8-billion takeover offer.
The statement opens the door to formal negotiations with Qwest that could jeopardize Frontier’s existing $10.9-billion merger agreement with Global Crossing Ltd.
Qwest and Global Crossing are fighting for control of Frontier and US West Inc., a regional Baby Bell phone company. Both suitors want the customer bases and sales of Frontier and US West to help build global fiber-optic cable networks capable of carrying high-speed Internet traffic.
Frontier, which is based in Rochester, N.Y., said its decision to hold talks with Qwest “in no way reflects a change in the Frontier board’s current approval and recommendation of the Global Crossing merger agreement.”
Qwest, however, took Wednesday’s announcement as a turning of the tide.
“We are confident that after the review process, Frontier’s board will recognize the clear financial and strategic superiority of Qwest’s offer over Global Crossing’s,” Joseph P. Nacchio, Qwest’s chairman and chief executive, said in a statement.
Bermuda-based Global Crossing, which has corporate offices in Los Angeles, said in a statement that it is “confident that our existing agreement is superior to Qwest’s revised offer based on strategic, financial, regulatory and timing considerations. We are confident that once the Frontier board completes its exploratory process, it will reaffirm its existing agreement.”
Behind all the saber-rattling, all of the companies are scrambling to survive as the Internet reshapes the communications industry. Technology is uniting the features of television, telephone and computer, and industry leaders such as AT&T; Corp. and upstarts such as Qwest and Global Crossing are racing to control the high-speed wires connecting homes and businesses around the world.
Guy Woodlief, an analyst with Prudential Securities, said, “You have to analyze all the possible routes to maximize value to your shareholders; you can’t ignore a bid from Qwest, which at the moment has a superior monetary value.”
In Nasdaq trading, Qwest shares rose 19 cents to close at $33.06 and Global Crossing rose 13 cents to close at $42.63. On the New York Stock Exchange, Frontier rose 50 cents to close at $58.63.
