MCI Shareholder Seeks to Defeat Verizon’s Bid

A hedge fund said Wednesday that it planned to solicit MCI Inc. shareholder support to defeat Verizon Communications Inc.’s $8.5-billion takeover of the long-distance provider and persuade Qwest Communications International Inc. to offer a new bid.

In a Securities and Exchange Commission filing, Deephaven Capital Management said it would solicit proxies from other MCI shareholders to vote against the Verizon-MCI deal.

Deephaven portfolio manager Matt Halbower said the company had contacted Qwest but he did not know whether it would resurrect its $9.85-billion bid for MCI.

“I’m hopeful, but ultimately it’s going to be their call,” Halbower said. “If the path exists because Deephaven is successful in collecting a majority of the proxies, I think it would be the right decision.”

A Qwest spokesman declined to comment.

Qwest Chief Executive Richard Notebaert said last month that the company had ended its three-month pursuit of MCI, but a source close to the company who asked not to be identified said Wednesday that if shareholders defeat Verizon’s takeover of MCI, Qwest executives might review their options.

Representatives of Ashburn, Va.-based MCI and New York-based Verizon both said they believed the combining of their companies remained in the best interest of their shareholders. A shareholders meeting to vote on the deal has not been set but is expected in July.

Based in Minnetonka, Minn., Deephaven owns about 16 million shares of MCI and nearly 1 million Qwest shares.

Denver-based Qwest provides local phone service in 14 mostly Western states.

Verizon shares rose 15 cents to $35.16, and Qwest stock closed flat at $3.68. MCI shares increased 21 cents to $25.70.