MCI rejects Qwest's $8.9 billion buyout offer and turns again to Verizon

Wednesday, April 6th 2005, 8:06 am

By: News On 6

DENVER (AP) _ The board of MCI Inc. has rejected an $8.9 billion buyout proposal from Qwest Communications, opting instead to go with a lesser offer from Verizon Communications Inc.

In a statement early Wednesday, the MCI board said the firm was ``not willing to jeopardize the certainty of its Verizon agreement for the uncertainties surrounding the Qwest proposal.''

Qwest Communications International Inc., which has made three bids for MCI, plans to evaluate the situation before deciding its next move, Qwest spokesman Steve Hammack said Tuesday night.

``We are weighing our options, and shareholders will dictate the next steps in the process,'' Hammack said. ``MCI's board of directors has chosen to reject what we believe is a superior offer to acquire MCI.''

Denver-based Qwest issued a midnight Tuesday deadline to MCI last week when it raised its bid by nearly $500 million to $8.9 billion, or about 20 percent more than the sweetened $7.5 billion Verizon bid that MCI accepted just days earlier.

Verizon spokesman Peter Thonis read a statement early Wednesday that said the company was ``pleased.''

``We are looking forward to working with MCI shareholders to get the deal done promptly,'' the statement said.

Verizon and Qwest, two of the nation's biggest telephone companies, have been battling for about two months over Ashburn, Va.-based MCI, which operates a national fiber-optic network serving a lucrative roster of government and corporate clients.

MCI's board has been worried about Qwest's financial troubles, including a $17 billion debt load, and the long-term value of the Qwest shares that will be used as partial payment for the buyout. As a result, MCI has twice accepted lower bids from Verizon rather than agreeing to merge with Qwest.

Qwest's most recent offer of cash and stock was worth $27.50 a share. Verizon's latest stock-and-cash bid values MCI at $23.10 per share, up from $20.75 under the original agreement those companies reached in mid-February.

Qwest, the local phone company for 14 mostly Western states, has argued that its merger proposal would be less harmful in the competitive environment and would gain regulatory approval more quickly than a Verizon-MCI combination.

Based in New York, Verizon is the dominant phone company in the eastern part of the country.