The board of "Baby Bell" US West Inc. last night all but rejected an unsolicited takeover offer from Qwest Communications International Inc., saying that it prefers its planned merger with Global Crossing Ltd.
"At this time, the board continues to believe its strategic merger with Global Crossing announced May 17 provides significant value to US West's shareholders and will ensure that the strategic vision of US West will be implemented," the board said in a late-night statement.
In an interview, US West spokesman Dave Banks said that calling the board's decision not to take action on the Qwest offer an outright rejection would be "a little harsh." Instead, he explained, "based on existing circumstances and the existing offer, it doesn't warrant any further consideration."
The company statement cited concerns that the Qwest deal would not provide the "total value creation" of the $32.2 billion Global Crossing offer. It cited the steep plunge in Qwest's stock value after it announced its plans to take over US West, the risks such instability could cause the company. The company also took issue with "the lack of assurance that US West's strategies will be executed" under the Qwest deal.
A merger of US West and two-year-old Global Crossing would combine the overseas fiber-optic cables being laid by the younger company with the established, 14-state local phone and high-speed data services provided by the established telephone company -- a "21st century network that will have both local touch and global reach," US West chief executive Solomon Trujillo said in the statement. Global Crossing had earlier agreed to merge with Rochester, N.Y.-based Frontier Corp.
Qwest's bid for both US West and Frontier, initially valued by Qwest at $66.4 billion, has turned those merger plans into a bidding war. Last week Frontier's board, like US West last night, declined to act on the Qwest offer.
"In addition to our existing voice services, our vision for some time has been to create a data- and wireless-centric company that provides integrated services to customers inside our current region and globally," Trujillo said.
"We continue to support and are excited about the strategy we've put forth," Trujillo said.
Robert Annunziata, chief executive of Global Crossing, issued a statement last night saying he was "pleased" with the US West decision. "We remain focused on completing both transactions as quickly as possible," Annunziata said.
A Qwest spokesman did not return calls last night seeking comment.