Verizon Furthers Bid With 13% MCI Stake
Verizon Communications Inc. said Saturday it was paying $1.1 billion to acquire a 13.4% stake in MCI Inc. directly from its largest single stockholder.
The transaction removes a major wild card in Verizon’s bid to fend off a higher-priced offer to acquire MCI by Qwest Communications International Inc. of Denver.
The New York telephone company is paying $25.72 per share in cash to Mexican billionaire Carlos Slim Helu, who had previously expressed dissatisfaction with offers from Verizon and Qwest. The deal values Slim’s 43.4 million shares at an 11% premium to the $23.10 per share Verizon agreed to pay MCI’s other shareholders two weeks ago in a sweetened $7.5-billion deal.
Verizon Chief Executive Ivan Seidenberg appeared to leave open the possibility that Verizon might increase its payout to the other shareholders of MCI, based in Ashburn, Va.
“While this was an opportunity for us to purchase a block of shares under unique circumstances and is an important step forward in our acquisition of MCI, we will continue to assess the situation as we move toward a vote by the MCI shareholders,” Seidenberg said in a statement.
Verizon and Qwest, two of the nation’s biggest telephone companies, have been battling for two months to win MCI and its national fiber-optic network and lucrative roster of government and corporate clients.
MCI’s board has twice rejected higher-priced offers from Qwest out of concern for that company’s weak financial condition. Qwest criticized Verizon’s deal with Slim and said it would continue its pursuit of MCI.
“By entering into its deal with Mr. Slim, Verizon has both created two classes of shareholders and called into question the MCI board’s previous determination that Verizon’s lower offer to the other MCI shareholders was superior and fair,” Qwest said in a statement Saturday.
MCI spokesman Peter Lucht declined to comment.
The price being paid for Slim’s MCI shares is almost even with Friday’s closing quote of $25.84, but about 7% below Qwest’s latest offer of $27.50.
Qwest, which has bid $8.9 billion for MCI, said Friday that a telephone poll showed shareholders who owned more than half of MCI’s outstanding stock considered Qwest’s bid superior to Verizon’s. However, Verizon’s agreement with Slim removes a potential source of dissent against its deal.
Slim shares were not included in the poll results, said a source close to Qwest who spoke on condition of anonymity. Qwest could submit a new bid or take its case directly to shareholders through a tender offer or proxy fight.
