NEW YORK - MCI switched its preference Monday for the second time in a week, endorsing a new 8.44-billion-dollar takeover offer from Verizon Communications even though it was below that of rival telecom giant Qwest.
In the latest twist in the telecom takeover battle, MCI said its board unanimously supported the new Verizon bid, calling it "superior" to the April 21 offer from Qwest.
That marked a turnabout from last week, when the board said it was supporting a 9.7-billion-dollar offer from Qwest.
MCI said that in assessing the competing proposals, the board "carefully weighed the expected range of potential values for MCI's shareholders under each offer, as well as the risks to achieving those values."
The company said that "a large number of MCI's most important business customers had indicated that they prefer" an MCI-Verizon deal to an MCI-Qwest combination.
"Additionally, as their contracts come up for renewal, a number of customers have also requested rights to terminate their arrangements with MCI in the event of a Qwest transaction," MCI said.
The new bid from Verizon is worth at least 26 dollars a share, composed of 5.60 dollars in cash plus either 0.5743 Verizon shares or 20.40 dollars of Verizon shares, whichever is greater. MCI closed Friday at 26.53.
Qwest, the Denver, Colorado regional telecommunications provider, most recently offered 16 dollars in cash and 3.373 of its shares for each MCI share. Qwest shares were unchanged Friday at 3.42.
Last week, Qwest said that shareholders owning more than half of MCI's stock preferred its proposal over the terms Verizon offered to Carlos Slim Helu, MCI's largest single investor. Qwest cited a survey by its proxy solicitor.
In April, Verizon agreed to pay at least 25.72 dollars a share in cash for Slim's 13.4 percent MCI stake.
MCI executives and board members have mostly favored Verizon because of its stronger financial position and better mix of services, including a major wireless division.
"From the standpoint of risk versus reward, Verizon's revised offer presents MCI with a stronger, superior choice," MCI chairman Nicholas Katzenbach said.
"Shareholders receive enhanced value with greater assurance that the transaction will create additional shareholder value."
But the battle could still be waged among shareholders who may face a choice of the two rivals.
New York-based Verizon is the largest local phone operator in the United States and also owns a majority portion of the nation's number-two wireless carrier.
The deal would give Verizon, the biggest US telecom firm, MCI's Internet backbone network as well as its long-distance operations and major customers, including the US government departments of defense and homeland security.
The merger would also involve the loss of about 7,000 jobs in planned efficiency savings.
Qwest, like Verizon, is a major regional telecom carrier but lacks a wireless service and is saddled with heavy debts.
In late-morning trade, MCI fell six cents to 26.47, while Verizon rose 14 cents to 35.94. Qwest dipped three cents to 3.39.

05/02/2005 15:42 GMT