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Tuesday April 26, 08:52
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Qwest can start tasting victory over Verizon in fight for MCI
(by Natali Novak)
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Qwest International’s sustaining fight for MCI with its rival Verizon Communications seems to be not far from the successful end.
On Apr. 21, Qwest Communications increased its "best and final" bid for MCI by 9%, to $30 a share, totalling $9.7bn in its latest effort to overrun Verizon.
With its new offer, Qwest met many of the conditions requested by MCI’s board. Previously, MCI’s board has agreed to merge with Verizon in a deal worth $23.10 a share.
On Apr. 23, after two earlier bids being refused, Qwest finally managed to fight out a yes. The latest offer includes $16 per share in cash, worth about $5.2 billion, and the rest in Qwest stock.
However, Verizon is not out of the game yet, say some analysts. It will have five days to increase its offer. As its previous offer has been approved two weeks ago, Verizon, not MCI, has the right to break the current merger agreement and demand a $240 million breakup fee. Still, maybe analysts are expecting Verizon to improve its offer.
But on the other hand, if Verizon decides to raise its offer to compete with that of Qwest, such payment seems to exceed its capability. "I don’t know how are they going to afford it," says American Technology Research analyst Albert Lin. "Most people who run the balance sheet numbers on Qwest say this just looks impossibly difficult."
In view of such circumstances, Qwest chief executive Richard Notebaert can probably start tasting victory.
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