Qwest May Increase Bid for MCI
Qwest Communications International Inc., the No. 4 local-telephone provider, plans to raise its $8-billion offer for MCI Inc. in a bid to break up MCI’s proposed acquisition by Verizon Communications Inc., people familiar with the matter said Friday.
MCI, the No. 2 U.S. long-distance operator, reopened negotiations after Denver-based Qwest revised the $24.60-a-share bid. Qwest may increase the cash element of the cash-and-stock proposal, said two people familiar with the matter who asked not to be named.
A more attractive bid from Qwest would increase pressure on Verizon, the No. 1 U.S. phone company, to offer more than the $6.75 billion it agreed to pay. MCI’s largest shareholders, including Mexican telecommunications billionaire Carlos Slim, said last week that MCI Chief Executive Michael Capellas should push Qwest and Verizon for a higher offer.
“This may force Verizon to finally come in and increase their bid,” said Ed Paik, manager of the $400-million Columbia Utilities Fund in Boston. The fund, part of Bank of America Corp., owns shares of all three phone companies. “If they really want it, they can have it. They’re just going to have to pay up.”
Qwest Chief Executive Richard Notebaert and Verizon CEO Ivan Seidenberg are dueling for one of the last available U.S. long-distance operators, which has contracts with large companies such as Hewlett-Packard Co.
“We have a very good bid on the table, a bid that takes into consideration all of the shareowners, the customers and the employees of MCI,” Verizon spokesman Eric Rabe said.
Qwest spokesman Tyler Gronbach and Peter Lucht, a spokesman for Ashburn, Va.-based MCI, declined to comment on Qwest’s plans.
MCI directors agreed to the lower offer because they considered New York-based Verizon, with a market value of $100 billion, a stronger partner than Qwest, which is capitalized at $7 billion.
The Securities and Exchange Commission, meanwhile, will sue former Qwest CEO Joseph Nacchio next week for his role in overstated sales, people familiar with the matter said Friday. The SEC also plans to file suits against former Chief Financial Officers Robin Szeliga and Robert Woodruff and ex-President Afshin Mohebbi, bringing to 12 the number of former Qwest officials who will be sued or who have already settled.
Shares of MCI rose 36 cents to $24.09 on Nasdaq. Qwest gained 1 cent to $3.85 on the New York Stock Exchange. Verizon fell 10 cents to $36.07, also on the NYSE.
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Bloomberg News and Associated Press were used in compiling this report.
