Spurned in an attempt to buy MCI, Qwest plans to sweeten the takeover offer in an effort to derail MCI's agreement with Verizon.

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Spurned in an attempt to buy MCI, Qwest plans to sweeten the takeover offer in an effort to derail MCI’s agreement with Verizon.

Shares of MCI, the No. 2 U.S. long-distance phone company, jumped 4.5 percent in extended trading.

“We feel very strongly about this,” said Richard Notebaert, Qwest chief executive officer, in an interview. “We do intend, after we review the Verizon merger agreement, to submit a modified offer.”

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Qwest outlined the plan in a letter to MCI directors yesterday, released through a regulatory filing.

MCI agreed Sunday to be bought by Verizon, choosing a $6.75 billion offer over Qwest’s bid of about $8 billion. Qwest said MCI never responded to the offer made last Friday and that Qwest was given limited access to MCI’s books.

“Momentum is certainly shifting back toward Qwest,” said Tim Gilbert, a fixed-income analyst at Principal Global Investors, which oversees $125 billion in assets, including Qwest bonds. “Qwest now stands a chance of at least making Verizon come back to the table.”

MCI shares gained 84 cents in extended trading after declining 21 cents to $20.66 yesterday. Shares of Verizon fell 44 cents to $35.68, and Qwest fell 13 cents to $3.84.

Notebaert is stepping up pressure on MCI to reconsider the decision to pair with Verizon. He’s been spurred on by some of MCI’s biggest shareholders, who say the Verizon agreement undervalues the company.

MCI Chief Executive Michael Capellas spent the past two days in meetings designed to convince stockholders that a combination with Verizon would attract more customers and help MCI compete with SBC.

“We would expect MCI and its advisers to engage us in a meaningful dialogue regarding the merits of our offer,” Notebaert said in the letter, which was filed with the Securities and Exchange Commission.

Verizon spokesman Peter Thonis declined to comment.

MCI accepted a $20.75 bid from Verizon, comprising $14.75 in stock, $1.50 in cash and $4.50 in dividends. Qwest yesterday said it offered $24.60 a share for MCI, including $15.05 in stock, $7.50 in cash and $1.60 in dividend payments.

Qwest’s offer is better than Verizon’s because it would take at least six months less to win clearance from regulators and because MCI shareholders would take part in about 40 percent of the benefits of the Qwest deal, Notebaert wrote in the letter.

Verizon and Qwest, the No. 4 U.S. local phone company, are tussling over one of the last remaining independent U.S. long-distance operators and access to a 98,000-mile network that supports the Internet in 140 countries.

MCI offers a buyer cash flow that may reach about $2 billion this year, clients including Airbus and partnerships with companies such as Oracle.

Bruce Berkowitz, president of Fairholme Capital Management, MCI’s fourth-largest shareholder with 3.5 percent of the stock, said earlier yesterday that he remains opposed to the agreement with Verizon.

MCI is “beachfront property” and is worthy of a “beachfront price,” Berkowitz said.

Capellas, 50, and Chief Financial Officer Robert Blakely told shareholders that large corporate customers said that they would prefer the company combine with Verizon rather than the smaller Qwest, according to people who attended the discussions.

Combining with Qwest may also cost MCI part of the $1 billion of annual revenue it gets from U.S. government contracts, Capellas reportedly said.

Qwest also faces liabilities from shareholder lawsuits, Capellas said, according to the people at the discussions. As of the third quarter, Qwest had set aside $750 million in part to cover suits filed by investors who lost money as the company’s shares plummeted.