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Verizon mum as MCI bid deadline approaches
Associated Press
Published April 30, 2005
NEW YORK - There was no word Friday from Verizon Communications Inc. with a deadline looming to decide whether to pay more to buy MCI Inc. before the long-distance phone company switches allegiances to Qwest and a higher-priced bid of $9.75-billion.
Verizon, though widely expected to boost its offer rather than quit the three-month bidding war, could ignore the midnight deadline, which was triggered by MCI's decision last weekend to declare the rival bid superior.
Instead, Verizon could decide to wait for MCI shareholders to vote on the existing merger agreement, although that would free MCI's board to switch its recommendation to Qwest Communications International Inc. Alternatively, Verizon could walk away with $250-million in breakup fees and legal reimbursements.
Verizon declined comment Friday as to whether any announcements were impending. MCI did not immediately respond to a request for comment.
Analysts say that since Verizon has won MCI's favor twice with a lower-priced bid than Qwest, it wouldn't need to match Qwest's latest offer of $30 a share.
MCI's board has justified accepting Verizon's lower offers, most recently $23.10, out of concern over Qwest's $17.3-billion debt load and weak positioning in a difficult industry. The board also has questioned whether Qwest can meet its forecast of nearly $3-billion a year in cost savings from the proposed merger.
However, hedge funds and other short-term investors are pressuring MCI to secure the biggest payoff possible, and the gap between the offers makes it harder to argue that long-term investors would be better served by the Verizon deal.
Qwest on Friday put out a statement saying a survey by its proxy adviser had found that investors holding most of MCI's outstanding shares "believe that Qwest's $30 per share bid for MCI is superior, even if Verizon were to increase its offer for all shareholders to the $25.72 per share offer, plus the call option."
[Last modified April 30, 2005, 00:50:14]
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