New York – Verizon Communications Inc. submitted to federal regulators today the documents it plans to distribute to MCI Inc. shareholders so they can vote on Verizon’s proposed $7.5 billion buyout of the long-distance telephone company.
Also today, MCI filed a statement repeating its rationale in turning down a higher-priced bid of $8.9 billion from Denver-based Qwest Communications International Inc., laying out the terms of the Verizon deal, and reviewing the sequence of events in the two-month bidding war between Verizon and Qwest.
But the MCI statement also specified that the merger materials Verizon filed with the Securities and Exchange Commission “are not yet final and will be amended.”
Though such language is standard in this type of filing, MCI signaled Monday that it may seek a higher buyout price from Verizon following that company’s surprise weekend agreement to pay significantly more to MCI’s single largest stockholder for his shares.
Verizon is paying $1.1 billion for 43.4 million shares, or about 13.4 percent of MCI’s stock, from entities affiliated with Mexican billionaire Carlos Helu Slim. The purchase values MCI at $25.72 per share – 11 percent more than the $23.10 that Verizon agreed to pay in the sweetened deal reached with MCI two weeks ago.
The Verizon-Slim deal “is a private transaction between those two parties,” Monday’s statement said. “Nevertheless, MCI’s Board of Directors remains committed to obtaining the transaction that is in the best interests of all of its shareholders.”
Today’s filing by Verizon also registers the more than 132 million new Verizon common shares that will be issued to MCI investors as partial payment for their stock should they approve the deal.
The filing also includes a draft proxy statement and prospectus describing the proposed transaction, as well as a proxy card for MCI stockholders to fill out with their vote.
After the SEC completes its review of the filing, and once any changes are finalized, the materials will be sent to MCI shareholders.
The votes will be counted at a special meeting, the date of which has not been yet been announced.
Qwest, the local phone company in 14 mostly western states, has offered $27.50 per share to MCI, but MCI’s board has opted to partner with Verizon out of worry about Qwest’s weak financial health and questionable prospects.
“As of April 7 (when Verizon went to press), MCI had rejected Qwest’s latest bid to buy MCI, saying the proposal, taken as a whole, was not superior to its agreement with Verizon,” MCI said in today’s statement.
Shares of MCI rose 12 cents to $26.13 by late morning on the Nasdaq Stock Market, near the high end of a 52-week range of $12.51 to $26.06.
Verizon shares fell 19 cents to $34.71 on the New York Stock Exchange, near the low end of a 52-week range of $34.13 to $42.27.
Shares of Qwest rose 1 cent to $3.83 on the NYSE. The stock has been trading at a 52-week range of $2.56 to $4.86.
