MCI stood by its $6.7 billion deal yesterday to merge with Verizon despite an improved $8 billion bid to acquire the long-distance telephone company submitted a day earlier by Qwest.
DENVER — MCI stood by its $6.7 billion deal yesterday to merge with Verizon despite an improved $8 billion bid to acquire the long-distance telephone company submitted a day earlier by Qwest.
“We will do our utmost to drive [the Verizon deal] through. We entered into it. We believe in it,” MCI Chief Executive Michael Capellas said during a conference call after the company’s fourth-quarter earnings report.
“At the same time,” Capellas stressed, “we’ll do our fiduciary duty” to fully evaluate Qwest’s latest offer.
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Denver-based Qwest modified its offer for MCI on Thursday by adding a mechanism to guarantee the value of the stock portion of the bid, setting the stage for another round in its competition with Verizon.
Qwest also offered a faster cash payout to shareholders but did not increase the $8 billion value of the bid, according to a Securities and Exchange Commission filing on Thursday.
In a separate statement, Verizon spokesman Eric Rabe said, “Verizon has a signed agreement with MCI and [has] a proven track record of completing transactions that create value for shareholders, customers and employees.”
The new bid comes as some key MCI shareholders have put pressure on the company, which last week accepted a $6.7 billion offer from Verizon over Qwest’s initial $8 billion. At least one shareholder, hedge-fund manager Elliott Associates, has said it would vote against the Verizon-MCI merger, saying Qwest’s initial offer was superior.
Analysts have said Verizon, the dominant local phone company in the Northeast and a top cellular player, likely won MCI’s favor because it is larger and in better financial shape than Qwest.
Qwest, the local phone carrier in 14 Western and Midwestern states and owner of a national fiber-optic network, is weighed down by more than $16.7 billion in long-term debt, a weak wireless division and competition from cable and high-speed data companies.