Verizon's MCI takeover faces shareholder revolt
Shareholders want explanations...
Verizon's takeover of MCI could be stymied by MCI shareholders who want to know why an apparently higher offer for the firm was rejected.
Verizon offered $6.75bn for MCI - the company formerly known as WorldCom - which MCI accepted, despite receiving a offer from Qwest of a reported $7.3bn.
Three institutional investors, representing 10.5 per cent of MCI shares, believe MCI should reconsider the higher offer from Qwest or remain as an independent company. John Berkowitz, president of Short Hills, which owns 3.5 per cent of MCI, told Bloomberg the offer was "very disappointing for MCI owners". Paulson and Co and Fairholme Capital Management are the other two hold-out shareholders.
Qwest, the unsuccessful bidder seems unlikely to give up quietly. Qwest president Richard Notebaert said MCI's decision surprised him. "We were a very good fit for MCI or we would not have made the proposals as strong as they were. How do you argue leaving a billion of cash? That's a lot of money to leave on the table," he told Bloomberg.
But analysts are less certain that Qwest would be a better fit than Verizon.
Mexican billionaire Carlos Slim Helu owns over 13 per cent of MCI, which will net him $600m if the deal goes through. ®