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MCI/Verizon/Qwest slanging match continues

Histrionics and straw men

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MCI is refusing to talk to Qwest about its $8.45bn take-over offer. MCI's decision to go "dark" has angered Qwest so much its boss rattled off a sharply worded letter yesterday calling on MCI to "immediately engage in negotiations to finalize the proposed merger agreement" between MCI and Qwest.

For its part, MCI's management is content to press ahead with the $6.7bn deal it has already agreed with rival telco Verizon.

Wrote Qwest chairman and chief exec Richard C Notebaert: "Your advisors tell us that MCI has gone 'dark' and refuses to continue to speak with Qwest about our proposal [to acquire MCI].

"The straw man being propped up to explain why MCI won't continue what has been a fruitful exchange of information with Qwest is that MCI's merger agreement with Verizon prohibits any discussions with Qwest. It is disturbing that Verizon and MCI are so concerned about allowing MCI to expeditiously and transparently evaluate Qwest's proposal fully that they do not avail themselves of the provisions in the Verizon-MCI merger agreement to do so.

"It is beyond dispute that allowing Qwest and MCI to discuss Qwest's proposal during the period that the MCI Board of Directors is considering that proposal would be beneficial to all interested parties. The Verizon-MCI merger agreement allows, your fiduciary duties require and fairness to the MCI stockholders dictate that MCI continue to talk with Qwest as long as the MCI Board of Directors has concluded that Qwest's proposal could "reasonably be expected to lead to a Superior Proposal."

As the slanging match continued to show no sign of calming down, Verizon contnued to sweet-talk MCI while blasting Qwest's proposal as "profoundly flawed" and a "gross exaggeration".

Wrote Verizon boss Ivan Seidenberg on Tuesday: "We continue to believe the agreement with Verizon represents a fair and sustainable value proposition for MCI's stakeholders, including your investors, your customers, your employees, and your creditors. We will continue to work with you to complete our agreed transaction and will not be distracted by Qwest's histrionics, false statements and grossly exaggerated synergy claims."

Last week Qwest sweetened its offer for MCI taking the total paper and cash offer to $8.45bn. ®

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