Verizon rival Qwest raises its offer for MCI to $30 a share

Deadline is tomorrow to accept `final' bid

April 22, 2005|By Jon Van | Jon Van,CHICAGO TRIBUNE

Qwest Communications International raised its bid for MCI Inc. yesterday to $30 a share in yet another effort to derail Verizon Communications' attempt to acquire the nation's No. 2 long-distance carrier.

Qwest Chief Executive Officer Richard C. Notebaert offered $16 in cash and $14 in equity for each share of MCI, considerably more than the $23.50 a share MCI's board agreed to accept from Verizon.

In a letter to MCI Chairman Nicholas deB. Katzenbach, Notebaert gave MCI until 5 p.m. tomorrow to act on the proposal, which was valued at $9.74 billion. Otherwise, it will be withdrawn. The new bid is Qwest's "best and final offer," Notebaert said.

Verizon and Qwest, two of the nation's biggest regional telephone companies, have been battling for more than two months to win MCI, its national fiber-optic network and its lucrative government and corporate clients.

Many MCI shareholders have expressed dismay over the board's acceptance of Verizon's lower offers. They were especially irked after Verizon agreed to pay $25.72 a share to Carlos Slim, MCI's largest shareholder, for more than 13 percent of MCI stock.

Bill Miller, the star mutual fund manager at Baltimore's Legg Mason Inc., has been among the most vocal opponents of the Verizon-MCI deal and the buyout of Slim's stake.

Verizon might need to raise its offer or walk away, said investor Leon Cooperman. "The present Qwest offer, in my opinion, is much superior to Verizon's," said Cooperman, chief executive of Omega Advisors Inc. "There's no reason for Verizon to win MCI with any discount to the Qwest offer, and I hope and trust the MCI board will agree with that view."

Notebaert said the increased cash in his company's new offer was made possible in part by a commitment of $800 million from investors who hold more than 13 percent of MCI's stock. Qwest didn't identify them.

The company had been in talks to raise the funding from Legg Mason and American Express Co., people familiar with the matter said this month.

Last week, Qwest filed arguments with California regulators that such a deal is anti-competitive. Qwest also argued that the takeover of AT&T Corp. by SBC Communications Inc. is anti-competitive and should be barred by regulators.

MCI's board has argued that even though Verizon's offer is lower than Qwest's, it is in the best interests of MCI because of Verizon's strong financial condition. Qwest's shaky financial condition - it has $17 billion in debt - makes it a less desirable partner, the board said in its decision to go with Verizon.

MCI spokesman Peter Lucht said the Ashburn, Va., company would study the offer. "We've received the latest revised offer from Qwest, and our board will review it carefully as it has all previous offers," he said.

The Associated Press and Bloomberg News contributed to this article. The Chicago Tribune is a Tribune Publishing newspaper.

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