Qwest submitted another higher offer for MCI yesterday, increasing its cash-and-stock bid to $9.74 billion, about 30 percent higher than...
DENVER — Qwest submitted another higher offer for MCI yesterday, increasing its cash-and-stock bid to $9.74 billion, about 30 percent higher than the buyout deal that MCI has accepted from Verizon.
Qwest’s latest bid of $30 a share injects fresh uncertainty into a deal in which MCI directors — who have twice embraced Verizon over Qwest — could now be forced to accept a far higher offer.
The Qwest bid consists of $16 a share in cash — about $2.50 higher than the previous offer — using $800 million in equity commitments from MCI shareholders, Qwest CEO and Chairman Dick Notebaert said in a statement.
The remaining $14 would be paid in Qwest stock, based on an exchange ratio of 3.373 Qwest shares per MCI share. A guarantee to protect Qwest’s stock price remained in place.
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It also includes an additional $1 billion in committed financing to ease concerns about whether the combined company would have the financial resources to compete, Notebaert said in a letter to MCI’s board.
The latest bid, described as Qwest’s “best and final,” will be withdrawn if it is not declared superior and Verizon is not notified by 3 p.m. EDT (noon PDT) tomorrow, he said.
“We are confident that this revised proposal fulfills the MCI board’s description on April 5 of an offer it was prepared to find a superior proposal,” Notebaert said.
The MCI board two weeks ago accepted a $7.5 billion cash-and-stock offer from Verizon, valued at $23.10 per share, up from $20.75 under the original agreement those companies reached in mid-February.
MCI spokesman Peter Lucht said the company would review the revised Qwest 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.
In a statement, Verizon said, “As we move through the proxy process, we will continue to assess the situation and intend to take the necessary steps at the appropriate time to secure shareholder approval and complete our pending transaction.”
Verizon and Qwest, two of the nation’s biggest telephone companies, have been battling for more than two months to win MCI and its national fiber-optic network and lucrative roster of government and corporate clients.
Qwest’s previous cash-and-stock offer was worth $27.50 a share or $8.9 billion. The MCI board rejected that offer after Qwest refused to increase it to $30 a share.
The MCI board has voiced concerns about Qwest’s financial health — it has $17 billion in debt — and the long-term value of the shares Qwest would use as partial payment to MCI shareholders. It also has questioned whether Qwest could meet its forecast of nearly $3 billion a year in cost savings from the proposed merger.
Verizon said it is paying $1.1 billion to acquire a 13.4 percent stake in MCI from its largest single stockholder, Mexican billionaire Carlos Slim. The deal values Slim’s 43.4 million shares at an 11 percent premium to the $23.10 per share Verizon agreed to pay MCI’s other shareholders.
The company also appeared at the time to leave open the possibility that it might increase its payout to other MCI shareholders.
MCI shares rose 50 cents in extended trading after the higher Qwest bid was disclosed in a regulatory filing. They closed regular trading 23 cents higher, at $26.50.
Qwest shares rose 7 cents to close at $3.61, then added 4 cents in the late session. Verizon shares rose 48 cents to close at $34.26.