Qwest to MCI: 'Pretty Please?'
The total value of Qwest's $8 billion bid has not changed. But the cash/stock mix has gone from $7.50 in cash, $15.50 in stock, and $1.60 in guaranteed dividend payouts to $9.10 in cash and $15.50 in Qwest stock (see Qwest Makes Another Bid for MCI).
Additionally, Qwest's new offer contains a "collar," which protects MCI shareholders from any drop in Qwest's stock price while the proposed merger is in the approval process.
This is the second time Qwest has offered $8 billion for MCI, but its earlier bid was rejected. In a prepared statement this afternoon, MCI said its board of directors would "conduct a thorough review of the Qwest offer, as it has with all previous offers." Both of Qwest's offers value MCI at $24.60 a share, but MCI has already accepted Verizon's offer, which valued the company at $20.75 in cash, stock, and guaranteed dividend payments.
Rather than taking a hint, Qwest has pressed on in its unlikely endeavor.
"MCI has failed to provide meaningful guidance or direction in response to the Qwest proposal," writes Qwest CEO Richard Notebaert, in a letter to MCI's board. "Consequently, with only press reports and lawsuits as sources of information for how the MCI Board evaluated the components of our proposal, Qwest tenders this revised proposal, the terms of which are even more compelling for your stockholders."
Interestingly, just today, Qwest's CEO made the point that combining telecom companies in a wave of mergers doesn't exactly improve the industry.
"What's happening here before our eyes, depending on what the government does, is that we're not consolidating -- we are concentrating market power, potentially," says Qwest's Notebaert said in an interview with the Associated Press. "My concern, and I think the concern that the policy-makers should have, is that bigness does not equal better."
Qwest's shares took a dip in after-hours trading Thursday, falling $0.01 (0.24%) to $4.19.
— Phil Harvey, News Editor, Light Reading