Qwest Communications International is expected to submit a revised offer for MCI in the near future, despite being rebuffed twice in its...
DENVER — Qwest Communications International is expected to submit a revised offer for MCI in the near future, despite being rebuffed twice in its bid to snatch the long-distance carrier away from Verizon Communications, a source said yesterday.
Whether the offer takes the form of a new bid or a hostile takeover has not been decided, the source close to Qwest said on condition of anonymity.
Qwest’s board met yesterday, a day after MCI accepted a $7.64 billion acquisition offer from Verizon — about $800 million less than the most recent Qwest bid.
“The board was supportive of the company continuing its pursuit of MCI,” the source said.
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MCI spokesman Peter Lucht declined to comment. Qwest spokesman Steve Hammack declined comment on the board meeting.
“We have heard from a number of our shareholders,” he said in an e-mailed statement. “We continue to weigh all options.”
Qwest hired The Altman Group, a proxy consulting firm, several weeks ago to supplement the investor-relations staff members. President Ken Altman and Hammack declined to discuss the specifics of the contract.
For a second day, investors apparently welcomed the possibility of a renewed Qwest offer as MCI’s shares traded near their 52-week high and above the $23.10-per-share value of the Verizon offer.
MCI rose 67 cents to $24.45, while Verizon advanced 57 cents to $35.43. Qwest shares dropped 2 cents, or 0.5 percent, to $3.77.
Qwest has in reserve about $960 million in letters of commitment from banks, Janco Partners analyst Donna Jaegers said.
The Denver-based company — with local phone service in Washington and 13 other Western states and a nationwide fiber-optic network — could increase its offer $1 to $1.50 a share and take it directly to shareholders, she said.
Terms of the deal reached Tuesday call for Verizon to pay $1 billion more for MCI than it offered last month. It values MCI’s shares at $23.10 each, excluding a 40-cent dividend paid to MCI shareholders this month.
Qwest’s offer values MCI at $25.60 a share. Both offers include dividends MCI plans to pay before either deal would be completed.
Board members for Ashburn, Va.-based MCI have said they were worried about a merger with Qwest because it is smaller and financially weaker than New York-based Verizon, the dominant local phone company in the Northeast and Mid-Atlantic and a leader in the cellphone industry.
Qwest has $17 billion in debt, lacks a wireless division and faces growing competition from cable and high-speed data companies.
Qwest has sweetened its offer for MCI twice, raising the bid by $500 million.