Qwest Is Down, But Not Out
It’s like a boxing match where Rocky Balboa keeps getting beaten around the head, but still comes back for more: Qwest, down for a two-count, is punching their way back to another bid to buy MCI, this time at $9.7B, up from their previous jab with $8.9B, and 30% higher than the latest uppercut from Verizon. Mike predicted on April 6 that the battle wasn’t over yet, and was right. Qwest sweetened their offer by raising the cash portion of their offer relative to the equity portion, responding to MCI shareholder complaints that equity in VZW was worth far more than equity in Qwest. Strangely, Verizon bought the shares of MCI’s largest shareholder, a 13.4% stake, for 111% of the value they placed on the shares through their general offer to MCI shareholders, causing suspicion that Verizon was somehow trying to purchase voting power at the 11% premium in order to secure a better deal from the other MCI shareholders.
