Qwest Communications International Inc. on Thursday raised its takeover bid for MCI Inc. to $9 billion. Qwest's latest offer topped its previous bid of $8.45 billion and exceeds by 18 percent Verizon's sweetened offer of $7.6 billion that MCI accepted on Tuesday. MCI had cited Verizon's stable financial health and strong growth prospects as reasons for rejecting Qwest's previous overtures reports Reuters.. Denver-based Qwest is now offering MCI shareholders $27.50 a share, including $13.50 in cash and stock valued at $14. The company also strengthened protections against declines in Qwest's stock price.
"The higher offer and larger cash composition significantly improves Qwest's offer versus Verizon's," Lehman Brothers analyst Blake Bath said in a research report. "We now believe that Qwest's offer has a far greater chance of acceptance."
"I think it's an outstanding proposal. It's clearly superior to the Verizon offer," said John Paulson, whose Paulson & Co. hedge fund holds about 10.8 million MCI shares.
"Qwest is acting completely rationally," said Leon Cooperman, chairman of Omega Advisors, which owns about 3 percent of MCI's stock. He suggested that Qwest could raise its bid further based on the $14.8 billion in cost-savings the company estimated it could squeeze out of an MCI merger.
MCI said its board would review the latest Qwest proposal and "respond accordingly." Qwest said it would withdraw its offer if MCI failed to respond by April 5 and declared the bid superior to the deal with Verizon. New York-based Verizon would have five days to respond.
