Long-distance telephone company MCI decided yesterday to extend talks with Qwest on its $8.45 billion bid to break up MCI's merger agreement with rival Verizon.
NEW YORK — Long-distance telephone company MCI decided yesterday to extend talks with Qwest on its $8.45 billion bid to break up MCI’s merger agreement with rival Verizon.
Verizon, whose deal to acquire MCI is worth $1.9 billion less than Qwest’s bid, has consented to MCI’s request for a waiver to conduct further discussions, MCI said in a statement following a board meeting held yesterday.
MCI, formerly known as WorldCom, said it instructed its advisers and management to reopen the talks “promptly.”
But it declined to say how long it will take to decide whether it still sees the lower price Verizon is paying as justified due to Qwest’s far weaker financial condition and prospects.
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Verizon said MCI has until Monday to conclude the talks, which “we believe are in direct accordance with MCI’s fiduciary responsibility to its shareowners” to evaluate competing offers, spokesman Eric Rabe said.
Qwest, the Denver-based provider of local phone service across a large swath of the western United States including Washington state, welcomed the news.
“We understand that MCI’s board has additional questions surrounding our offer. We are confident that we can quickly address those questions and provide the basis for the board to declare that our bid for MCI is the superior offer,” Qwest spokesman Tyler Gronbach said.
A recent drop in Verizon’s share price has cut the value of that cash and stock deal from the original $6.75 billion to $6.56 billion now, intensifying pressure on MCI’s board to give Qwest another look.
With such a price difference, it might be difficult for MCI’s board to stand by its original contention Verizon is a less risky merger partner without paying more to at least partially close the gap between its deal and Qwest’s bid.