Price for Slim’s Shares Angers MCI Investors
Verizon Communications Inc.’s agreement over the weekend to buy Carlos Slim’s stake in MCI Inc. for more than it is offering other shareholders angered some of MCI’s largest owners and put pressure on MCI’s board to seek a higher offer.
Slim, the world’s fourth-richest person, will sell his 13% stake in MCI to Verizon for $25.72 a share, making Verizon the top MCI shareholder. Verizon, the biggest U.S. telephone company, will pay $2.62 a share more for Slim’s stake than the $23.10 it offered as part of a $7.51-billion agreement to buy MCI.
Bill Miller of Legg Mason Inc. and Leon Cooperman of Omega Advisors Inc., among MCI’s top 10 shareholders, wrote separately to the company’s board demanding that directors seek an equal price for all investors. Verizon’s purchase surprised Qwest Communications International Inc., which made a rival $8.94-billion offer and also was trying to negotiate with Slim, people familiar with the matter said.
“They’re creating two classes of shareholders, which is unacceptable,” Cooperman, whose New York-based firm owns 3.7% of MCI, said. “All shareholders should be treated equally.”
Cooperman and Miller, who runs Legg Mason’s investment arm, have said they will vote against Verizon’s $23.10 offer.
Shares of Ashburn, Va.-based MCI, the No. 2 U.S. long-distance carrier, rose 17 cents to $26.01 on Nasdaq, indicating that investors expect the company will be sold for more than Verizon’s offer.
MCI shares earlier reached $26.06, a 52-week high, with 31.7 million shares traded, more than twice the three-month daily average. Qwest fell 11 cents to $3.82 and Verizon dropped 17 cents to $34.90. Both trade on the New York Stock Exchange.
MCI said Monday that it wouldn’t scrap a provision aimed at repelling unwelcome suitors.
MCI directors have “no intention” of amending a so-called poison pill that would trigger the issuance of MCI shares in the event an unsolicited buyer acquires more than 15% of the stock, MCI said in a statement distributed by PR Newswire.
Verizon’s block of shares may make it harder for Qwest to build the shareholder support it needs to defeat Verizon’s bid. Verizon plans to call a shareholder vote on its agreement with MCI in the next few months. Qwest is also up against MCI’s board, which has spurned Qwest’s advances at least three times.
Qwest’s board met Sunday and may decide as early as this week whether to proceed with the offer, people familiar with the matter said.
The company may opt to bypass MCI’s board and take the bid, now at $27.50 a share, straight to investors.
