Frontier Rejects Qwest’s Unsolicited Bid
Long-distance phone company Frontier Corp. has rejected Qwest Communications International’s surprise $11-billion takeover bid and will continue with its existing agreement to be bought by Global Crossing Ltd.
In a statement issued late Thursday, Frontier said it had carefully reviewed Qwest’s June 13 unsolicited offer and determined that “the current circumstances surrounding the Qwest proposal do not warrant any change at this time.”
Rochester, N.Y.-based Frontier said it will continue moving toward “a prompt closing” of its deal with Global Crossing, an emerging telecommunications company based in Bermuda. Still, Frontier said it will “continue to monitor” the Qwest proposal.
Global Crossing had struck a deal to buy Frontier in March, offering $63 per share worth of Global Crossing stock--a buyout worth about $11.47 billion as of Thursday.
Over the weekend, Denver-based Qwest sought to break up that agreement with its offer to buy Frontier for $20 per share in cash and up to $44 in Qwest stock. Qwest also launched a rival bid for Baby Bell US West, which agreed last month to be acquired by Global Crossing.
When Qwest’s offers were announced, its Frontier proposal was worth up to $75 per share, or $13.6 billion. But Qwest’s stock price fell sharply this week, reducing the value of its offer to up to $64 per share, or $11.11 billion, based on Thursday’s closing prices.
In NYSE trading Thursday, Frontier shares fell 13 cents to close at $57.75, and US West shares fell 6 cents to close at $56.94. On Nasdaq, Qwest’s stock closed at $36, up 25 cents, and Global Crossing’s stock rose 56 cents to close at $48.81.
Frontier released its statement after the markets closed Thursday. Global Crossing said it was “pleased” by Frontier’s decision and plans to close that deal in the third quarter of this year.
Qwest, however, has not conceded defeat. The company said it was encouraged that Frontier has agreed to monitor the situation. The company added that it has no plans to increase its bid.
For both Qwest and Global Crossing, the fight is over the hefty revenue and loads of customers Frontier and US West would bring to their respective telecommunications networks.
Frontier is the nation’s fifth-largest long-distance company and runs valuable Internet and local phone businesses as well.
US West has more than 25 million customers in its 14-state territory, most of them in its local phone operation.
