Posted on: Friday, February 25, 2005

Qwest sweetens MCI offer

By Robert Manor
Chicago Tribune

CHICAGO — Qwest Communications International Inc. raised the ante in the bidding for MCI Inc. yesterday, offering investors quicker cash than opponent Verizon Communications Inc.

Qwest's revised bid was for $8 billion in cash and stock, which it offered less than two weeks ago. But this time the Denver-based phone company included a mechanism to protect MCI shareholders if the stock they would receive as part of the deal declines in value. Qwest did not increase the $9.10 cash component of its offer for each MCI share. But it said it would pay MCI investors $6 at the time of shareholder approval and another $3.10 when the deal closes.

MCI directors accepted Verizon's lower bid for $6.8 billion last week because the company is financially stronger than Qwest.

Analysts said they doubt MCI will break from Verizon because of Qwest's enhanced offer, but said Verizon might have to raise its bid for MCI.

Both Qwest and Verizon are bidding for the nation's No. 2 long-distance carrier in the aftermath of SBC Communications' proposed $16 billion purchase of AT&T Corp.