Qwest plans to raise its $8 billion offer for MCI in a bid to break up MCI's proposed acquisition by Verizon.
Qwest plans to raise its $8 billion offer for MCI in a bid to break up MCI’s proposed acquisition by Verizon, people familiar with the matter said.
MCI reopened negotiations after Qwest revised the $24.60-a-share bid. MCI directors were discussing Qwest’s approach in a meeting yesterday. Qwest may increase the cash element of the cash and stock proposal, said two of the people, who asked not to be named.
A more attractive bid from Qwest would increase pressure on Verizon to offer more than the $6.75 billion it agreed to pay. MCI’s largest shareholders, including billionaire Carlos Slim, said last week that MCI Chief Executive Officer Michael Capellas should push Qwest and Verizon for a higher offer.
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“This may force Verizon to finally come in and increase their bid,” said Ed Paik, manager of the $400 million Columbia Utilities Fund in Boston. The fund, part of Bank of America, owns shares of all three phone companies. “If they really want it, they can have it. They’re just going to have to pay up.”
Qwest CEO Richard Notebaert and Verizon CEO Ivan Seidenberg are dueling for one of the last available U.S. long-distance operators, which has contracts with large companies such as Hewlett-Packard.
“We have a very good bid on the table, a bid that takes into consideration all of the shareowners, the customers and the employees of MCI,” said Verizon spokesman Eric Rabe.
Qwest spokesman Tyler Gronbach and Peter Lucht, a spokesman for MCI, declined to comment on Qwest’s plans, which were first reported by Reuters.
MCI directors agreed to the lower offer because they considered Verizon, with a market value of $100 billion, a stronger partner than Qwest, which is capitalized at $7 billion.
Notebaert became CEO in 2002, taking over from Joseph Nacchio, who departed amid a U.S. Securities and Exchange Commission investigation into Qwest’s accounting that later found the company misreported about $3.8 billion in sales.
Nacchio will be sued by the SEC next week for his role in the overstated sales, people familiar with the matter said yesterday.
The SEC also plans to file suits against former Chief Financial Officer Robin Szeliga, former CFO Robert Woodruff and ex-President Afshin Mohebbi, bringing to 12 the number of ex-Qwest officials who will be sued or settle with the commission next week, said one person, who asked to not be named.
“If this is true, Mr. Nacchio will defend against it vigorously, and looks forward to being vindicated,” his spokeswoman Marcia Horowitz said of the SEC’s plans, which were earlier reported by The Wall Street Journal, The Denver Post and Rocky Mountain News.
David Meister, Woodruff’s attorney at Clifford Chance in New York, declined to comment, as did Terry Bird, Szeliga’s lawyer in Los Angeles.
“This is altogether surprising and unwarranted,” said Mohebbi’s lawyer, Paul Grand at Morvillo, Abramowitz, Grand, Iason & Silberberg in New York. “Mr. Mohebbi did absolutely nothing wrong, and we’ll defend any case until he’s vindicated.”