Verizon knocks out Qwest with revised offer
Qwest has conceded defeat in its battle for MCI. Verizon, its bigger and richer competitor returned to the table yesterday with a revised offer worth $8.8bn.
Verizon reclaimed its position as the "superior" suitor of MCI after raising its acquisition bid to at least $8.45bn. As has been the case since this process began, Verizon's bid was still well short of Qwest's offer for MCI - now at $9.9bn - but MCI's management has picked Verizon as the more suitable partner.
Verizon has offered up $26 per MCI share, beating out its previous bid of $23.10 per share. The deal on the table from Qwest basically stands at $30 per share.
"MCI today announced that its Board of Directors has unanimously determined that a revised offer from Verizon Communications Inc. is superior to the offer received from Qwest Communications International Inc. on April 21," MCI said.
In response, Qwest said it was withdrawing as it did not want to "continue in a process that seems to be permanently skewed against Qwest".
Verizon may have had the lower bid, but it's seen by many as the safer bet for MCI. In its statement, MCI noted that some large customers have threatened to terminate their contracts if Qwest ends up buying the company. In addition, the combined Verizon/MCI would be in a healthier competitive and financial position than a combined Qwest/MCI, according to MCI.
"From the standpoint of risk versus reward, Verizon's revised offer presents MCI with a stronger, superior choice," said Nicholas Katzenbach, chairman of MCI. "Shareholders receive enhanced value with greater assurance that the transaction will create additional shareholder value."
MCI still needs the approvals of shareholders and regulatory bodies to move forward with Verizon. Qwest could also choose to make another bid, although it termed the previous one its "best and final" offer.
After enduring a huge accounting scandal and bankruptcy, MCI must be enjoying this bidding war and positive press. It's good to feel wanted. ®
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