Qwest Plans New Bid for MCI
Having lost out to Verizon Communications Inc. (NYSE: VZ) in the race to buy MCI, the CEO of Qwest Communications International Inc. (NYSE: Q) has written a sniffy letter to the MCI board saying he plans to submit a renewed bid for the long-distance carrier, and this time he doesn't expect to be ignored (see Verizon Wins Tussle for MCI).
Nurse, pass the smelling salts!!
Notebaert is furious on numerous counts, and detailed his various peeves in the letter sent yesterday to MCI chairman Nicholas Katzenbach, which Qwest then filed with the Securities and Exchange Commission (SEC) so that we could all enjoy the show.
First off, he's convinced that MCI has accepted an inferior offer by agreeing to Verizon's $6.75 billion bid -- inferior by a cool $1.25 billion compared with Qwest's offer (see Qwest Filing Details $8B MCI Bid).
Second, Notebaert says the business and operational aspects of a Qwest acquisition are far superior. "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," he wrote, "and the value to the MCI shareholders from participation in approximately 40% of the synergies in a Qwest transaction will substantially exceed the value of synergies that would be received by MCI shareholders in a Verizon deal."
Third, he really really really wants to buy MCI. (He didn't put this in the letter, as such, but you can tell he's keen).
And last, but by no means least, Notebaert is absolutely fuming that MCI ignored Qwest's $8 billion offer and that MCI treated Verizon's approach with more respect. "We have not received any response from MCI or its advisors on the terms of our February 11 proposal, as reconfirmed on February 13. If we had received this response, we may have been already able to communicate to you a modified offer that would be beneficial to MCI shareholders."
And he's not done yet. "In addition, we were provided limited access to due diligence information regarding MCI, which we have been informed was substantially less than the access provided to other parties," writes the Qwest CEO (while probably trying to control his flaring nostrils and trembling bottom lip).
So what's next? A bigger, better bid with bells and knobs on.
Notebaert notes in the letter that Qwest now has a copy of the agreed Verizon deal, "and we are in the process of evaluating it." And once that deal has been picked over, pinned to the wall and punctured with Qwest darts, "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 and we would further expect access to due diligence information consistent with that offered other parties."
And if meaningful dialog is not forthcoming? We expect to see toys thrown from the pram, at the very least.
Qwest's stock dipped 13 cents, more than 3 percent, on Thursday to close at $3.84, which won't help the value of any planned stock-based bid. Verizon's share price fell 44 cents, just over 1 percent, to $35.68.
MCI's share price also fell Thursday, down 21 cents, or 1 percent, to $20.66, valuing the operator at $6.57 billion. But in pre-market trading this morning it shot up 88 cents, more than 4 percent, to $21.75.
— Ray Le Maistre, International News Editor, Light Reading