WASHINGTON - Qwest Communications on Thursday formally raised its offer for long-distance carrier MCI to 8.5 billion dollars, upping the ante in a bidding war with telecom giant Verizon.
As revised, Qwest said its 26-dollar-a-share bid carries a value more than 25 percent higher than the 20.75-dollar-a-share offer to which MCI has agreed with Verizon Communications, according to a filing that Denver-based Qwest made with the Securities and Exchange Commission.
MCI quickly responded, saying that it would conduct a "thorough review" of Qwest`s latest offer and that its board would have a response by the close of business on March 28.
Terms of the sweetened offer call for consideration to be paid as 10.50 dollars per share in cash, along with 15.50 dollars of Qwest stock based on an exchange ratio of Qwest shares per each outstanding MCI share.
"The fact that over 4.5 billion dollars of MCI`s shares have traded above 20.75 since February 14 ... indicates that MCI stockholders place superior value on our proposal," said Richard Notebaert, Qwest`s chairman and chief executive, in a letter to the MCI board that was contained in the SEC filing.
The revised proposal also "will deliver significant additional value to your stockholders from synergies of approximately 18 dollars per MCI share," Notebaert said.
But in a separate letter to the MCI board issued Wednesday, Verizon CEO Ivan Seidenberg derided Qwest`s estimate of prospective synergies growing out a merger.
MCI`s chief executive Michael Capellas has said the company chose Verizon because of its superior financial position, better growth prospects and strong position in the wireless market, the fastest-growing segment of the phone business. Yet major MCI stockholders representing at least 26 percent of the company`s common shares object to Verizon`s lower proposal and have pressured MCI to seek a higher offer.
CIBC World Markets analyst Tim Horan told clients Thursday he expects Verizon to raise its offer to no more than 23 to 25 dollars per MCI share. He said Verizon "can win the auction at a 10 percent discount to Qwest`s bid, due to its relatively strong fundamentals."
03/17/2005 16:07 GMT