Qwest to bid anew for MCI

A day after confirming and detailing its rebuffed bid for MCI, Qwest late Thursday said it would submit a "modified" offer for the carrier that accepted a lower bid from Verizon.

Qwest's 8-K filing on Feb. 17 contained a letter from CEO Richard Notebaert to MCI directors informing them of Qwest's intention to submit a new bid following a review of Verizon's $6.7 billion bid. He did not state whether the bid would be higher than the $8 billion offer of Feb. 11 that MCI spurned, and that Notebaert confirmed earlier this week.

"Published reports, including public disclosures by MCI's President and CEO, indicate that the consideration to MCI shareholders in the Verizon proposal is substantially less than the consideration Qwest offered to MCI shareholders," Notebaert stated in his letter to the MCI directors. "In addition to the superior merger consideration offered by Qwest to your shareholders compared to the Verizon offer, we would like to remind you that Qwest's proposal is superior to the Verizon proposal because our regulatory approval process is likely to be completed at least six months more quickly."

Notebaert stated in his letter that MCI never responded to Qwest's initial offer and that access to due diligence information regarding MCI was limited compared to other interested parties. 

"Once we have completed our review of the Verizon merger agreement, we do intend to submit a modified offer to acquire MCI and we would expect MCI and its advisors to engage us in a meaningful dialog regarding the merits of our offer," Notebaert stated in his letter.

Analysts believe MCI accepted Verizon's lower bid because Verizon's market cap is 14 times that of Qwest's. Qwest is also saddled with accounting problems, $17 billion in debt and the least attractive region of any of the RBOCs -- 14 states that encompass the Rocky Mountains and sparsely populated states like Wyoming, Montana and the Dakotas.

Qwest also does not have a strong wireless presence.

This story, "Qwest to bid anew for MCI" was originally published by The Edge.

Copyright © 2005 IDG Communications, Inc.

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