Qwest Raises Its Bid for MCI to $8.94 Billion

Edging closer to launching a hostile takeover attempt, Qwest Communications International Inc. on Thursday raised its bid for long-distance carrier MCI Inc. again -- this time to $8.94 billion in cash and stock.

The increase puts Qwest’s bid more than $1.4 billion higher than the offer MCI’s board accepted Tuesday from Verizon Communications Inc., the nation’s largest phone company.

MCI said its board, which has rejected Qwest three times so far, “will review the revised proposal and respond accordingly.” Qwest said the company must respond by midnight Tuesday.

“The ball is back in Verizon’s court and our baseline assumption is it will ... come back to MCI with an improved offer,” said Wall Street analyst David Barden of Banc of America Securities.

Verizon wouldn’t comment on Qwest’s bid or on what it might do.

The latest revised bid helped spur MCI’s stock to a 12-month high of $24.90 a share, up 45 cents on Nasdaq.

Qwest has hired proxy advisor Altman Group Inc., which helps solicit support from shareholders in takeover battles. Qwest has been talking with large MCI shareholders dissatisfied with the lower Verizon offer.

But launching a hostile takeover is expensive, and Qwest already is offering a purchase price well above its own stock market value, which was $6.7 billion based on Thursday’s closing stock price of $3.70 a share, down 7 cents on the New York Stock Exchange.

MCI’s directors believe a deal with Verizon makes more sense because together they can compete better for corporate and government customers against the goliath company being put together with SBC Communications Inc.’s pending acquisition of AT&T; Corp., the nation’s largest long-distance company.

Verizon also is financially stronger than Qwest and operates the second-largest mobile phone company. Qwest, the smallest of the Bell operating companies, which own most of the nation’s local phone networks, is the only one of those companies without its own wireless service.

In a letter Thursday, Qwest Chairman Richard C. Notebaert chastised MCI’s board for consistently favoring Verizon despite Qwest’s higher bids and for secretly negotiating an amended deal with Verizon when it was supposed to be focused on Qwest’s last proposal.

In Thursday’s revised offer, Qwest said it would pay $27.50 for each MCI share, including $13.50 in cash and $14 in Qwest stock.

Its previous offer of $25.60 a share, amounting to $8.32 billion, consisted of $10.10 in cash and $15.50 in stock.

Verizon’s revised bid consists of $8.35 in cash and $14.75 in stock, adding up to $23.10 a share, or a total of $7.51 billion.

Verizon shares rose 7 cents to $35.50 on the New York Stock Exchange.