Verizon prevails in battle for MCI
- By Roseanne Gerin
- May 03, 2005
Verizon Communications Inc. emerged as the winner yesterday with a revised $8.5 billion bid in a crushing 11-week battle with Qwest Communications International Inc. for long-distance company MCI Inc.
MCI Inc. said Verizon's revised offer of $26 per share with $5.60 in cash and the greater of 0.5743 Verizon shares for every share of MCI common stock or Verizon shares valued at $20.40 was superior to that of Qwest's offer.
On April 21, Denver-based Qwest upped its offer to $30 a share in cash and stock with a clause protecting shareholders should its share fall before a deal was completed.
Verizon first offered $6.7 billion for MCI in mid-February, and increased its offer twice in response to Qwest's countermoves to cast higher bids.
MCI's shareholders and regulatory authorities now must approve the deal. Verizon and MCI expect a shareholders vote to be held this summer. MCI's largest shareholders fought bitterly for the Ashburn, Va., company to accept Qwest's higher offer.
Both MCI and telecom analysts have said that Verizon's offer, despite being less in dollar value, would be better for MCI in that the New York company is financially stable with better prospects for growth. Qwest carries a high debt load and does not generate enough cash, they said.
The Verizon-Qwest bidding war over MCI started after SBC Communications Inc. of San Antonio, announced on Jan. 31 that it was buying AT&T Corp. of Bedminster, N.J., the country's largest long-distance carrier, for $16 billion.
MCI, formerly WorldCom Inc., emerged from bankruptcy in April 2004. It ranks No. 37 on the Washington Technology 2004 Top 100 list of federal prime contractors. The 2005 list will be released May 9.