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MCI Gives Qwest Hope

Light Reading
News Analysis
Light Reading
4/25/2005

Another week, another shift in the tortured relationships among MCI Inc. (Nasdaq: MCIP), Qwest Communications International Inc. (NYSE: Q), and Verizon Communications Inc. (NYSE: VZ).

During the weekend, MCI's board announced that Qwest's latest takeover offer, made Friday, is superior to Verizon's (see MCI: Qwest Offer Is Superior and Qwest: Twice Bitten, Not Shy). Now Verizon has until this Friday, April 29, to come back with a revised offer.

It seems MCI's board is hoping Verizon will do just that. While conceding that the $30 per share Qwest bid is superior to Verizon's $23.10 offer, MCI says it is maintaining (until this Friday at least) its recommendation of a merger with Verizon.

Qwest, meanwhile, is pushing MCI to forge ahead with setting up a takeover deal. "We expect MCI to build upon its declaration of superiority with specific acts of support, including expeditiously seeking regulatory approvals of a transaction that it considers superior and in the best interests of its shareowners,” the RBOC said in a statement (see Qwest Glee at MCI's Decision).

It'll also be hoping to rub Verizon's nose in it by offering to buy the MCI shares its rival holds following a deal with significant shareholder Carlos Slim (see Qwest Responds to Verizon's MCI Stock Buy and Slim's Pickins).

Verizon has shown its usual contempt for the latest developments, noting that if it "elects to terminate the agreement with MCI," the long-distance carrier would need to pay it $240 million plus up to $10 million in expenses, and would have to pay the same amount again if MCI merged with Qwest (see Verizon Responds to MCI/Qwest).

— Ray Le Maistre, International News Editor, Light Reading

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