Qwest continues its fight for MCI

Qwest CEO Richard Notebaert sent a letter Thursday to MCI's board of directors, stating that he wants more information about Verizon Communications' $6.7 billion offer so that his company can make a counteroffer.

Richard Notebaert
CEO, Qwest

"We would like to advise you that once we have completed our review of the Verizon merger agreement, we do intend to submit a modified offer to acquire MCI, and we would expect MCI and its advisers to engage us in meaningful dialogue regarding the merits of our offer, and we would further expect access to due diligence information consistent with that offered other parties," Notebaert said in the letter, which was filed with the U.S. Securities and Exchange Commission after the market closed Thursday.

The tone of the letter clearly suggests that Notebaert feels slighted by the board's rejection of Qwest's $8 billion offer. He argued in his letter that Qwest's offer is "superior" to Verizon's, not only because it is higher than Verizon's but because it will likely take half the time to get regulatory approval. Qwest published details of the offer in an SEC filing Wednesday.

Notebaert also complained that Qwest was handicapped in the bidding process from the start because it was not given the same access to information about MCI that "other parties" were given. And finally, Notebaert appears to be miffed that MCI never responded to his company's offer.

"To date, we have not received any response from MCI or its advisers on the terms of our Feb. 11 proposal, as reconfirmed on Feb. 13. If we had received this response, we may have been already able to communicate to you a modified offer that would be beneficial to MCI shareholders," he said in his letter.

At least three of MCI's top institutional investors have voiced their concern about the Verizon merger. These investors collectively own roughly 11 percent of the company.

If Notebaert makes good on his promise to fight for MCI, it wouldn't be the first time the long-distance carrier became the center of a bidding war. A merger between British Telecom and MCI was derailed in the late 1990s, when carriers GTE and WorldCom started bidding for the company. WorldCom eventually prevailed, paying $37 billion for MCI.

In retrospect, the deal with WorldCom marked the beginning of the end for MCI. Four years after the merger was completed, WorldCom filed for the largest bankruptcy protection in U.S. history amid a corporate scandal.