Qwest Communications International Inc. has increased its bid for MCI Inc. by $5.40 a share from the $24.60 a share it first offered in February, pushing its proposed offer to $9.74 billion. The Denver company hopes its latest bid will entice MCI's board to break its $7.65 billion merger agreement with Verizon Communications Inc.
Qwest has given MCI's board of directors a deadline of 5 p.m. today to declare its bid superior, after which the company said it would withdraw its offer. If MCI favors Qwest, Verizon would have five days to consider a counterproposal.
MCI has rejected three previous bids from Qwest, citing its weaker financial condition compared with rival Verizon.
(Leonard Spoden -- AP)
In the past 2 1/2 months, MCI's board has entertained three other Qwest offers and turned each one down, but this time, the offer on the table matches the $30-a-share price MCI's board on April 5 asked Qwest to meet. At that time, MCI's board told Qwest that if the $30 price and other conditions were met, MCI would deem Qwest's bid superior to Verizon's offer of $23.10 a share.
Qwest initially rejected the board's April 5 request but has since raised $800 million in private equity from a group of MCI's largest shareholders, primarily hedge funds including Omega Advisors and Legg Mason Capital Management, the latter being one of Qwest's largest investors.
Among the pros and cons MCI will have to consider: Verizon is a financially more stable company, and MCI says some of its customers prefer a deal with Verizon. On the other hand, Qwest is offering a fatter cash premium, and many of MCI's shareholders seem to prefer a deal with more cash, even if a Qwest-MCI deal carries more long-term risk to the combined company's health.
-- Yuki Noguchi