MCI re-answers call from Qwest; Verizon has five days to buzz in
NEW YORK (AP) -- MCI Inc. embraced a $9.75 billion takeover bid Saturday from Qwest Communications Inc., finally succumbing to pressure to scrap its lower-priced deal with Verizon Communications Inc.
Verizon now has five business days to respond with an improved proposal or walk away without MCI.
MCI said its board of directors, after shunning three prior bids from Qwest, had determined that the latest offer was superior to the long-distance phone company's $7.5 billion agreement with Verizon.
The announcement does not immediately swing the MCI board's recommendation away from the lower-priced Verizon deal. Under the terms of that agreement, such a change cannot occur until after the five-day waiting period.
Verizon's options include boosting its offer a second time or walking away with a sizeable breakup fee.
Alternatively, the New York-based phone company could call for an immediate vote on its deal by MCI shareholders, hopeful that enough are fearful of Qwest's shaky finances and strategic outlook.
Representatives of Verizon and Qwest did not immediately comment on MCI's announcement.
Offering less than Qwest
Should Verizon choose to pay more, it wouldn't necessarily need to match the $30 a share which Qwest offered Thursday.
MCI's board has twice accepted lower-priced deals with Verizon, so it's entirely likely that Verizon could prevail again with a lower bid. The current Verizon deal, for example, values MCI at $23.10 per share or more, $4.40 less than Qwest's previous offer of $27.50.
The MCI statement, which came several hours before a deadline set by Qwest in submitting its new offer on Thursday, said Qwest's proposal gives the board until May 3 to change its recommendation away from Verizon.
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