Subject:  Qwest modifies MCI bid, offers cover for fall in share price |
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ma_bell
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Date Posted: 16:15:01 02/25/05 Fri
Qwest modifies MCI bid, offers cover for fall in share price
WASHINGTON: Qwest Communications International Inc has modified its US$8bil bid for long-distance telephone company MCI Inc by adding protection against a drop in its stock price and giving a faster cash payout.
MCI had last week rejected Qwest's previous bid, also worth US$8bil, in favour of a US$6.75bil offer from Verizon Communications Inc.
Some investors, however, have criticised MCI’s board for ignoring a more lucrative deal in favour of a proposal it believes offered more certainty and future growth potential.
In a letter to the MCI board on Thursday, Qwest did not change the total value of its offer, which values MCI at US$24.60 a share, nor did it increase the total cash component of the offer. Instead, the revised bid includes a collar providing MCI shareholders with protection against a decline of up to 10% in Qwest’s stock price.
Qwest also offered a faster payout of cash to MCI shareholders, saying they would receive US$6 a share in dividends paid by MCI before the closure of the deal, instead of US$1.60 per share under its previous offer.
Including the dividend payments, Qwest’s offer includes a total cash component of US$9.10 a share. Verizon’s offer, meanwhile, values MCI at US$20.42 a share based on Thursday’s closing stock prices. That includes US$14.42 in Verizon stock, US$1.50 a share in cash, and US$4.50 a share in quarterly and special dividends paid by MCI.
MCI said it would thoroughly review Qwest’s revised offer. – Reuters
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