Verizon is threatening to walk away from its deal with MCI unless Qwest's bid, valued at $27.50 per share compared with Verizon's $23.50 per share, is quickly spurned by MCI (see MCI to Qwest: 'We'll Talk' and Qwest Comments on Verizon Comments).
In its latest letter to the MCI board, Verizon states:
- Verizon believes that the decision facing MCI is not about the math of a particular moment in time; it is about good business judgment, the best interests of shareowners and the long-term viability of the new company.
Based on these criteria, Qwest has submitted what we believe to be an inferior offer. If the MCI Board, capitulating to Qwest's artificial deadline, declares this bid to be 'superior,' it would seem to us that the decision-making process is being driven by the interests of short-term investors rather than the company's long-term strength and viability. Should this occur, we would no longer be interested in participating in such a process.
With Verizon turning the screw, the MCI acquisition saga looks to be drawing to a close after six weeks of bids and counterbids. And with Verizon's original and revised offers having been accepted by the MCI board, and Qwest's bids never having passed first base, the form guide suggests MCI will stick with its original choice.
Whatever the outcome, the ongoing subject of M&A activity is not likely to fade away, as whichever RBOC walks away from MCI empty handed will no doubt investigate alternative options, such as willing target Level 3 Communications Inc. (Nasdaq: LVLT). (See Level 3 Weighs Its Options and Level 3 Kills Stockholder Rights Plan.)
MCI's share price closed Monday down 21 cents, just less than 1 percent, at $25.08. Verizon's stock finished the day up 46 cents, just more than 1 percent, at $35.65, while Qwest's share price had risen 18 cents, nearly 5 percent, to $3.82.
— Ray Le Maistre, International News Editor, Light Reading