Qwest Communications International Inc. raised its bid to acquire MCI Inc. to $9.7 billion, providing both a higher overall bid price as well as a greater percentage of cash. The new offer trumps Qwest’s previous $8.9 billion bid and is 30-percent higher than a previously accepted bid made by Verizon Communications Inc.
Qwest’s new bid, which the company claimed was its “best and final” offer, includes $16 per in cash and $14 in equity for each MCI share. The cash portion of the offer is a $2.50 increase per share over Qwest’s previous offer and includes $800 million in equity commitments from some of MCI’s larger shareholders. Qwest also said that it would provide an additional $1 billion in financing commitments to MCI, bringing the total commitments to $7.25 billion, in response to MCI’s board request for additional liquidity to ensure Qwest’s ability to finance a possible acquisition.
Qwest also said it would meet MCI’s demands that a possible acquisition would be complete if MCI’s earnings before interest, taxes, depreciation and amortization results fail to meet expectations.
MCI, which has repeatedly turned down Qwest’s superior financial offers in favor of Verizon, said it had received and was reviewing Qwest’s latest proposal. MCI’s board already accepted a bid from Verizon in late March that calls for MCI to receive $23.10 in cash and stock for each MCI share.
Several MCI shareholders have questioned MCI’s decision to accept the lower bid, though MCI’s largest single shareholder, Carlos Slim Helu, accepted a $1.1 billion offer from Verizon earlier this month for his 13.4-percent stake in MCI. The offer was an 11-percent premium over Verizon’s general offer to MCI and drew reaction from other MCI shareholders demanding that MCI try to attain the highest value for all investors. Qwest said its latest offer would be extended to Slim.
Verizon said it was assessing Qwest’s latest proposal, and it could increase its offer if necessary.
“As we move through the proxy process, we will continue to assess the situation and intend to take the necessary steps at the appropriate time to secure shareholder approval and complete our pending transaction,” Verizon said in a statement.
