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Verizon Goes to $26

Light Reading
Supercomm News Analysis
Light Reading
5/2/2005

It looks as if Carlos Slim could have held out for an extra $0.28 per share.

In the latest move in the drawn-out bidding war for MCI Inc. (Nasdaq: MCIP), Verizon Communications Inc. (NYSE: VZ) has raised its offer to $26 per share, consisting of $5.60 in cash and the remainder in Verizon stock. The move comes after Qwest Communications International Inc. (NYSE: Q) most recently raised its own bid for the carrier for $30 (Qwest Won't Qwit on MCI).

Anticipation that Verizon would raise its offer was high, as a deadline expired on midnight Friday for Verizon to change its existing deal with MCI, which was struck in February (see Verizon to Buy MCI in $6.7B Deal). Many observers had expected its offer to go higher (see Analysts: Verizon Will Ante Up). Verizon’s prior offer was $23.50, but it had already agreed to pay $25.72 to buy 13 percent of the MCI shares from Mexican billionaire Carlos Slim Helu, gaining more control over the acquisition target (see Verizon Buys Slim's MCI Stock and Slim's Pickins).

In response to the revised offer, MCI this morning issued a statement saying that its board of directors has “unanimously determined that a revised offer from Verizon Communications Inc. is superior” to the the last offer it received from Qwest.

In its statement, MCI said it had considered many factors, but one important factor it outlined in particular was that its “most important business customers” had indicated a preference for a merger with Verizon.

Does that mean it’s over? Who knows. The bidding war, which has now carried on for months, has pushed MCI beyond a price that many analysts consider reasonable. Most see Verizon in control, because it already has an agreement with MCI in place.

— R. Scott Raynovich, US Editor, Light Reading

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