MCI Seeks to Reopen Talks With Qwest

MCI Inc. invited Qwest Communications International Inc. to reopen merger talks Friday, just three days after the long-distance phone company agreed to a sweetened $7.5-billion buyout from Verizon Communications Inc. and a day after Qwest raised its bid to nearly $9 billion.

Qwest dismissed the gesture as disingenuous and reiterated a Tuesday deadline for MCI to accept or reject its offer. The Denver-based company noted that when MCI agreed to the new Verizon deal Tuesday, it notified Qwest that there was no need for additional discussions.

“Therefore, it is questionable what additional information the MCI board would require at this time,” Qwest said in a statement.

The news release also criticized MCI for agreeing to new provisions in the Verizon deal that handcuff MCI’s ability to terminate that contract in favor of a superior proposal.

“We urge the MCI board to cease its favoritism ... and run a fair, transparent, complete and timely sales process.”

MCI’s stock rose for a fourth straight session Friday -- to a level nearly 10% higher than the price Verizon has agreed to pay -- as investors again speculated that either Verizon would be forced to boost its bid again or Qwest might pull off an upset in the two-month tussle.

Shares of MCI rose 39 cents to $25.29 on Nasdaq. Verizon shares fell 31 cents to $35.19, while Qwest shares slipped 6 cents to $3.64, both on the New York Stock Exchange.

Instead of bidding higher, Verizon could try to halt the bidding by triggering a provision in its agreement that would require a straight vote by MCI shareholders on the current deal.

In that scenario, Verizon would be betting that longer-term MCI investors are too concerned about Qwest’s financial frailty and whether the Qwest shares they would receive as payment would hold their value. Much of the pressure on MCI’s board to accept Qwest’s offer has come from hedge funds and other short-term investors who would likely dump their Qwest shares soon after receiving them.

“We may ask for a vote at some point and have that right under our agreement of [Tuesday], but have not yet. No comment on whether we will,” Verizon spokesman Eric Rabe said.