Qwest Communications International Inc. is preparing to increase its bid for MCI Inc. even as it considers other, more hostile options for trying to beat out Verizon Communications Inc. and acquire the company, a source close to Qwest said yesterday.
Ashburn-based MCI, spurning Qwest for a second time, on Tuesday accepted a sweetened offer from Verizon for $900 million more cash, bringing the total to $7.65 billion in cash and stock. Qwest could announce a new offer as early as this week, the source said, speaking on condition of anonymity because of the private nature of the discussions.
Richard C. Notebaert is chairman of Qwest Communications International, which is continuing its attempt to acquire MCI Inc. despite two rejected bids.
(David Zalubowski -- AP)
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Qwest's current offer of $8.45 billion in cash and stock is $800 million more than what Verizon has agreed to pay for the company.
MCI has said it carefully considered Qwest's offers but considers Verizon a bigger, stronger and better fit for the company.
If another bid is rejected, Qwest could gear up for a proxy fight -- a risky and potentially bitter battle to wrest control of MCI's board by going directly to MCI shareholders, buying shares from them and electing a new board of directors.
Qwest recently hired the Altman Group Inc., a proxy advisor that helps solicit support from shareholders in takeover battles. The firm is identifying and communicating with MCI shareholders, a spokesman for Qwest said, but it could be retained to help the company in the event of a proxy battle. MCI also has retained a proxy adviser.
Qwest's board met yesterday to consider its next steps. "We are looking into all options," said Claire Mylott, a spokeswoman for Qwest, but she declined to disclose details of the company's considerations.
The Denver company is much smaller than Verizon and carries more than $17 billion in debt, so it lacks the financial flexibility of Verizon to raise its offer.
Still, a hostile takeover bid would be harder, cost millions of additional dollars, and could drag on for months as the companies lobby and meet with shareholders.
"It's a months-long process. It's very, very, very expensive," said Nell Minow, co-founder of the Corporate Library, an organization that researches corporate governance.
