Qwest (Quote) will make a new bid for MCI (Quote) after it reviews Verizon's (Quote) offer for the long-distance carrier, according to a Securities & Exchange Commission (SEC) filing.
The news comes three days after Verizon said it would acquire MCI in a stock and cash deal valued at $6.7 billion.
Included in the SEC filing is a letter from Richard Notebaert, Qwest chairman
and CEO, to Nicholas Katzenbach, MCI chairman, stating his intention to submit a second bid. Notebaert also said MCI had accepted what he considers a lesser offer.
"In addition to the superior merger consideration offered by Qwest to your
shareholders compared to the Verizon offer, we would like to remind you that
Qwest's proposal is superior to the Verizon proposal because our regulatory
approval process is likely to be completed at least six months more quickly," Notebaert said.
He added that "the value to the MCI shareholders from participation in approximately 40
percent of the synergies in a Qwest transaction will substantially exceed
the value of synergies that would be received by MCI shareholders in a
Verizon deal."
According to Notebaert's letter, Qwest had twice submitted a written
acquisition proposal to MCI and not received any response. Also,
he claims, the due diligence information Qwest received was "substantially
less" than that provided to other parties.
MCI officials were not available for comment at press time.
At Qwest's quarterly financial call Wednesday, Notebaert said
his company was keeping its options open
to acquire MCI, despite the belief by industry experts that the Baby
Bell did not stand much of a chance. Analysts noted
MCI clearly preferred its long-term prospects with Verizon, rather than with
debt-burdened Qwest.
Later that day, Qwest filed an SEC filing enumerating its original MCI bid,
which officials hadn't confirmed earlier: an ownership stake of 40 percent
for MCI, $1.60 per share in dividends over four quarters, $7.50 in cash per
MCI share and 3.735 Qwest shares per MCI share.
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