Qwest has left the MCI sweepstakes, but
it didn't go quietly.
The Denver regional carrier this afternoon said it "isn't in the best
interests of shareholders, customers and employees to continue in a process
that seems to be permanently skewed against Qwest."
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"It appears that MCI's board of directors has surrendered control of the
bidding process once again," Qwest said. "By accepting a lower offer,
without even contacting Qwest, and by reportedly allowing Verizon to
instruct MCI to impugn Qwest, it is only fair to conclude that MCI is more
interested in bending to Verizons will than serving its shareholders."
The announcement rules out the possibility that Qwest would take its case
directly to MCI shareholders in a hostile takeover attempt.
Qwest threw in the towel just hours after the Ashburn, Va., long-distance
and enterprise network services provider deemed Verizon's latest $8.4 billion ($26 per share) offer superior to Qwest's $9.7 billion ($30 per share) proposal.
MCI officials listed several factors they say compensate for the $1.3
billion difference, including Verizon's wireless assets, lack of debt and
feedback from its corporate and government customers.
In response, Qwest defended recent efforts around wireless, DSL and VoIP, as well as reiterated its synergy estimates. Qwest said it would go into more details during tomorrow's quarterly conference call.
It also signaled that it isn't done trying to expand its national presence
through acquisition, while at the same time lashing out at pending industry
mergers.
"The proposed industry mega-mergers will undoubtedly reduce customer
choice," Qwest said. "To better protect the interests of customers, the
market requires multiple, robust competitors committed to ensuring that
innovation and value remain inherent in America's telecommunications
marketplace."
Verizon and MCI will move forward with regulatory filings, and Qwest is
expected to oppose the planned merger. The process will likely take 12 to
18 months to complete.
Despite suffering through an accounting scandal that drove it into
bankruptcy, MCI was coveted for its large IP data-service deals with
government agencies and corporations. And with the pending merger of SBC
and AT&T, neither wants to be left behind by
the wave of industry consolidation.
The Baby Bells consider those long-term, high-margin contracts crucial to
their future prosperity, as cable operators, VoIP upstarts and wireless
carriers try to hone in on their traditional businesses.
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Qwest Bids Bitter Goodbye to MCI Pursuit