Qwest Communications International Inc. disclosed yesterday that it had offered $8 billion to buy MCI Inc., a move that could spur further criticism from MCI shareholders unhappy with the phone company's decision to accept a deal valued at $6.75 billion from Verizon Communications Inc.
Denver-based Qwest said in a filing with the Securities and Exchange Commission that it offered $24.60 in cash and stock for each share of Ashburn-based MCI. That offer was made Feb. 11. Two days later, MCI's board voted to accept $20.75 a share in cash and stock from Verizon, describing the deal as a better long-term value for shareholders.
"There was a lot of misinformation and confusion in the marketplace, and we felt it was appropriate to file a Form 8-K to set the record straight," said Tyler Gronbach, a Qwest spokesman. He declined to say whether Qwest would renew its bid.
Some shareholders expressed hope that Qwest might make another offer.
"I think Qwest has been beseeched by unhappy MCI shareholders to come back in," said Leon Cooperman, manager at Omega Advisors Inc., a hedge fund that owns 3 percent of MCI's stock. "I want the best deal for my shareholders."
Peter Lucht, an MCI spokesman, defended the Verizon deal yesterday. "After exhaustive review of the alternatives on the table, we're very confident that our board made the right decision for our shareholders, customers and employees."
MCI is still dealing with the aftermath of accounting problems and a bankruptcy reorganization, and the company's board was wary of Qwest's past accounting problems, according to a source familiar with the MCI board's private deliberations who spoke on condition of anonymity. MCI board members were concerned that the federal government could block Qwest from getting new government business, which is a large part of MCI's revenue, the source said.
Even if Qwest wanted to keep the bidding war alive, analysts said it's not likely to get far.
"Verizon to Qwest is like the prince and the pauper. They aren't even in the same financial galaxy," said Scott Cleland, chief executive of the Precursor Group in Washington.