MCI looks to Verizon
- By Michael Hardy
- Mar 29, 2005
MCI officials, after considering a sweetened acquisition offer from Qwest Communications International, have decided to stick with their original decision to sell the company to Verizon, MCI officials announced today.
Qwest's new offer was worth about the same as its first proposal -- $8 billion in cash and stock -- but changed the schedule so that MCI shareholders would get more of the money when the deal was approved rather than having to wait for it to close. The new offer also included protections against any drop in Qwest share prices.
Verizon also submitted a new deal, raising their per-share offer by a total of $900 million in cash. The company's original offer had valued MCI at about $6.75 billion. The agreement includes a termination fee of $240 million that MCI may have to pay to Verizon if MCI officials cancel the transaction.
To an extent, the value of any cash and stock acquisition varies, depending on the prices the stocks are trading for when the deal closes.
Although Qwest is offering more money, MCI officials believe a merger with Verizon makes more strategic sense, taking into account factors including the increasing need for scale, comprehensive wireless capabilities, ongoing ability to sustain network service quality and investment in new capabilities.
"MCI's board has been closely and carefully evaluating all of the recent developments," said Nicholas Katzenbach, company chairman, in a written statement. "We believe Verizon’s substantial increase in its offer, the strength of its competitive position and the financial certainty at close make this offer compelling to our shareholders, customers and employees."