From Deseret News archives:

Qwest-Verizon fight for MCI heats up

Published: Monday, March 21, 2005 9:28 p.m. MST
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DENVER — The heads of Verizon Communications and Qwest Communications kicked their multibillion-dollar tug-of-war for MCI Inc. up a notch Monday with tartly worded letters to the long-distance carrier's board.

Verizon Communications Inc. CEO Ivan Seidenberg said he will continue to pursue a merger with MCI and "will not be distracted by Qwest's histrionics, false statements and grossly exaggerated synergy claims."

A short time later, Qwest Communications International Inc. CEO Richard Notebaert criticized MCI in a letter for stopping merger discussions, saying shareholders are being deprived of their right to maximize share value.

MCI has said it will respond to Qwest's latest $8.45 billion offer by March 28.

MCI spokesman Peter Lucht declined to comment on Seidenberg's letter and said MCI was limited to a two-week period for negotiations with Qwest under its agreement with Verizon.

"That period has expired, and by honoring our agreement with Verizon we cannot have further dialogue with Qwest," he said.

The competition for MCI, based in Ashburn, Va., has become increasingly public with a flurry of statements and news releases issued by both Qwest and Verizon in the past several weeks.

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MCI agreed in February to be acquired by Verizon in a deal currently valued at $20.30 per share, or about $6.6 billion, with $2 billion in cash, or $6 per MCI share.

It reopened talks with Qwest with Verizon's blessing. Qwest last week offered $26 a share for MCI, including $3.4 billion in cash and slightly more than $5 billion worth of Qwest stock.

In his letter, Seidenberg criticized key issues of Qwest's offer, including its planned synergies, stock price guarantee and financing commitment. He also took issue with Qwest's claim that its merger with MCI would be approved by federal regulators more quickly than a Verizon-MCI union.

"Each of these statements is either a gross exaggeration or not supported by the facts," Seidenberg wrote.

Qwest spokesman Tyler Gronbach said in a statement that his company has submitted a superior offer. "Any attempt to mask that fact is not in the best interests of MCI's shareowners," he said.

Although MCI officials broke off negotiations after the two-week period ended Thursday, Notebaert said in his letter that he believed both sides should continue to talk.

"The MCI board should take the actions necessary to maximize value to MCI shareholders and insure the MCI merger process is transparent and fair by re-engaging with Qwest," Notebaert wrote.

Verizon declined comment on Notebaert's letter.

Qwest shares closed unchanged at $3.85 on the New York Stock Exchange Monday, where Verizon shares declined 20 cents, or 0.6 percent, to close at $34.95. MCI shares fell 14 cents, or 0.6 percent, to close at $23.30 on the Nasdaq Stock Market.

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