Qwest's offer rejected again

MCI once again rejected Qwest's offer to buy the company.

Can you hear me now, Qwest? Thanks, but no thanks.

The board of directors at MCI has once again rejected Qwest Communications' takeover bid, but the drama may not be over as Qwest plans to take its fight to shareholders.

Late Tuesday night, MCI announced it was rejecting Qwest's offer of $8.9 billion for Verizon's $7.5 billion bid. But Qwest isn't giving up just yet. The company looks to be preparing for a proxy fight with Verizon.

"We are confident that our offer is superior, and statements of support from many MCI shareowners indicate that they are in agreement with us," the company said in a statement. "Qwest will allow shareholders to dictate the next steps."

As I have said before on this blog, Qwest's unrelenting pursuit of MCI looks pathetically desperate. I understand that MCI is the number 2 long distance company in the United States. But the last time I checked long distance was a dying business. As for MCI's corporate business, AT&T is still considered the leader.

What's more, acquisitions in general are tough to pull off. Any CEO would tell you that the majority of them fail. Integrating different networks together is no easy task. I'm not sure why anyone would fight so hard for assets that may end up being more trouble than they are worth in the future.

Qwest already has a bad reputation when it comes to servicing its existing customers. In the 14 states where it operates its local phone business, which used to be called U.S. West, customers refer to it as U.S. Worst. Not a ringing endorsement in terms of service. And in the enterprise game, which I'm guessing is why Qwest wants MCI, service is crucial.

I suppose it will be interesting to see how the battle plays out. Will shareholders take Qwest's money and run or will they heed the board's advice and stick with the Verizon offer? Stay tuned as the drama continues to unfold.

 

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