Verizon, Qwest Trade Barbs Over MCI
The heads of Verizon Communications Inc. and Qwest Communications International Inc. kicked their multibillion-dollar tug of war for MCI Inc. up a notch Monday with letters to the long-distance carrier’s board.
Verizon Chief Executive Ivan Seidenberg said he would continue to pursue a merger with MCI and “will not be distracted by Qwest’s histrionics, false statements and grossly exaggerated synergy claims.”
A short time later, Qwest CEO Richard Notebaert criticized MCI in a letter for stopping merger discussions, saying shareholders were being deprived of their right to maximize share value.
MCI has said it would respond to Qwest’s latest offer, for $8.5 billion, by March 28.
MCI spokesman Peter Lucht declined to comment on Seidenberg’s letter and said MCI was limited to a two-week period for negotiations with Qwest under its agreement with Verizon.
“That period has expired and by honoring our agreement with Verizon we cannot have further dialogue with Qwest,” he said.
The competition for Ashburn, Va.-based MCI has become increasingly public with a flurry of statements and news releases issued by both Qwest and Verizon in the last several weeks.
MCI agreed in February to be acquired by Verizon in a deal currently valued at $20.30 a share, or about $6.6 billion, with $2 billion in cash, or $6 per MCI share.
It reopened talks with Qwest with Verizon’s blessing. Qwest last week offered $26 a share for MCI, including $3.4 billion in cash and slightly more than $5 billion of Qwest stock.
In his letter, Seidenberg criticized key aspects of Qwest’s offer, including its planned synergies, stock price guarantee and financing commitment. He also took issue with Qwest’s claim that its merger with MCI would be approved by federal regulators more quickly than a Verizon-MCI union.
“Each of these statements is either a gross exaggeration or not supported by the facts,” Seidenberg wrote.
Qwest spokesman Tyler Gronbach said in a statement that his company had submitted a superior offer. “Any attempt to mask that fact is not in the best interests of MCI’s shareowners,” he said.
Although MCI executives broke off negotiations after the two-week period ended Thursday, Notebaert said in his letter that he believed both sides should continue to talk.
“The MCI board should take the actions necessary to maximize value to MCI shareholders” and ensure the MCI merger process is “transparent and fair by reengaging with Qwest,” Notebaert wrote.
Verizon declined to comment on Notebaert’s letter.
Qwest shares closed unchanged at $3.85 on the New York Stock Exchange, where Verizon shares declined 20 cents to $34.95. MCI shares fell 14 cents to $23.30 on Nasdaq.
