Verizon wins latest--and final?--bid for MCI
After a month of offers and counteroffers from Qwest, MCI says it is sticking with Verizon.
MCI's board of directors said Tuesday that it has accepted a new and improved offer from Verizon that includes more cash and protection for MCI shareholders in case Verizon's shares decline.
Under the new agreement, Verizon will acquire MCI for an aggregate price tag of $7.6 billion, or $23.50 per share, which includes a recent 40 cent dividend.
The new offer includes an additional $2.75 per share in cash for a total cash offering of $8.35 per share.
In February, MCI's board bypassed a bid from Qwest and accepted Verizon's original offer to buy the company for $6.75 billion. But MCI resumed talks with Qwest after it raised its bid. Earlier this month, Verizon agreed to allow MCI to talk with Qwest until midnight Monday.
Qwest, which operates in 14 sparsely populated states throughout the western United States, is considered a financially inferior company to Verizon, which dominates phone service in the densely populated Northeast and mid-Atlantic region, including metropolitan areas such as New York and Boston.
But Qwest has argued that its deal is better for MCI shareholders because it will generate more than twice the savings as the deal Verizon has offered. Qwest has also argued that a Qwest-MCI deal would move more quickly through the regulatory process than one with Verizon.
Despite the MCI board's latest decision, Qwest is not giving up hope. On Monday, Qwest said it would give MCI until April 5 to respond to its $8.5 billion offer before it withdraws the offer.
"We respect the right of Verizon to change the composition and value of their bid," Qwest said in a statement. "But we still believe our proposal creates superior value for shareowners. We are going to assess the situation and determine what is in the best interests of shareowners, customers and employees."