Qwest Once Again Revises Offer for MCI, Vows to Fight
Qwest made a 3rd offer for MCI on Thurs., raising its bid to $9.07 billion. Qwest urged the MCI board to weigh its offer. “We're not giving up,” Qwest Senior Vp Gary Lytle told us. “There’s no give-up in Qwest.” Lytle said Qwest is concerned that rival suitor Verizon has convinced the MCI board not to listen to shareholders. Lytle said Qwest specifically calls on MCI to let shareholders vote on its latest offer.
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“What they have done is basically ignore the shareholders of MCI, and MCI’s board has abandoned their responsibilities as a board,” Lytle said. “It’s basically a lock-up for Verizon. It would appear to us that Verizon has successfully wrested control of MCI from their board… We want their board to consider our offer. Verizon has basically said ‘You can’t even consider the offer.'”
Qwest filed a letter revising its offer with the SEC. The previous bid was $8.45 billion. The new offer is $27.90 per share, including $13.50 in cash, $14 in stock and a 40 cents dividend already paid shareholders. If rejected again, Qwest could be paving the way for a hostile bid. Verizon and MCI had agreed to a $20.70-per- share offer, which Verizon later upped to $23.50 in cash and stock. MCI said in a statement its board will “review the revised proposal and respond accordingly.”
Patrick McGurn, exec. vp of Institutional Shareholder Services, said on CNBC Thurs. MCI is a “rare” company because a few major shareholders control huge amounts of stock. It’s a “phone booth” company, he said: Controlling shareholders could fit in a phone booth.
Qwest this week hired a proxy consulting firm, Altman Group, which could mark a step toward taking its offer directly to shareholders. The Altman Group has been involved in major corporate fights -- for example, helping unsecured creditors for Montgomery Ward oppose the plan of reorganization put forward by GE Capital.