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MCI again rejects Qwest bid
By Martyn Williams

The board of MCI Inc. has again rejected a takeover bid by Qwest Communications International Inc., Qwest said Wednesday. The rejection appears to make it more likely that Verizon Communications Inc. will get its way in acquiring MCI, a proposition MCI has agreed to twice already.

Qwest has been trying to woo MCI since mid-February when MCI said it had accepted a takeover bid from rival carrier Verizon. The bid would have seen Verizon pay $6.7 billion for MCI. However, subsequent bids and counter-bids have resulted in Verizon raising its offer to about $7.6 billion, which has been accepted by MCI's board.

Despite that acceptance and with the blessing of Verizon, MCI returned to discussions with Qwest this week after the carrier attempted to trump Verizon by offering to pay around US$8.9 billion.

On Monday, while waiting the outcome of the discussions, Verizon suggested that it would walk away from the table should MCI decide to accept Qwest's offer. In a letter to MCI's top executives, Verizon's Chairman and CEO Ivan Seidenberg said his company would conclude that an acceptance of Qwest's offer means the MCI board is interested in short-term investors and not on the company's long-term strength, according to a statement issued by Verizon.

"Should this occur, we would no longer be interested in participating in such a process," the statement said.

Reacting to the latest rejection, Qwest said on Wednesday that it is weighing its options. The carrier also put some hope in MCI shareholders coming to its rescue in the event that they should favor the higher Qwest bid.

"We are confident that our offer is superior, and statements of support from many MCI share owners indicate that they are in agreement with us," Qwest said in the statement. "And, as stated above, Qwest will allow shareholders to dictate the next steps."

Posted April 6, 2005 03:56 PM |