Qwest to MCI: Decide by April 5
Meanwhile, The Wall Street Journal reported this morning that Verizon has raised its cash-and-stock offer for MCI to $23.50 a share. That's $900 million higher than Verizon's last bid, but it's still below Qwest's latest offer.
Verizon had agreed to let MCI continue its talks with Qwest up until March 28. Yesterday, Qwest issued its own deadline, saying it will give MCI until April 5 to make up its mind, and if MCI doesn't take the Qwest deal at that time, the offer will be withdrawn.
"Since both of us recognize the importance of reaching a decision promptly, we think it is reasonable to inform you that if we have not executed an agreement on or before midnight, April 5, 2005, our offer will be withdrawn,” wrote Qwest chairman and CEO Richard C. Notebaert in a letter to the MCI board that was filed with the SEC yesterday.
The letter also contains some positive reinforcement. Apparently in response to the MCI board’s concerns over Qwest’s considerable debt, Qwest moved quickly over the weekend to secure from its lenders an additional $500 million in credit. It now has a credit line of $5.75 billion to help finance the deal, the letter says.
MCI is expected to either reject Qwest’s offer outright or decide that the offer and the last two weeks’ discussions might reasonably lead to a deal, and request another round of talks.
In early February, Qwest and Verizon started competing for MCI, with Qwest reported to have offered as much as $6.3 billion (see Qwest Wants MCI, Says Report). But Verizon entered the bidding and won the initial stage of the competition, publicly announcing a deal for $6.8 billion on February 14 (see Verizon Wins Tussle for MCI).
Qwest evenutally increased its bid to $8.45 billion (see Qwest Ups MCI Bid to $8.45B). MCI’s board recognized its fiduciary responsibility to consider the offer, and Verizon consented to new Qwest/MCI talks (see Qwest Ain't Too Proud to Beg).
On March 23, Verizon agreed to let MCI continue discussions with Qwest through March 28. Now that the deadline has expired, all eyes are on MCI to choose one of its two suitors.
— Mark Sullivan, Reporter, Light Reading