Qwest’s bid for MCI is full of false statements and “might be more appropriately considered in the category of Modern Fiction,” Verizon chairman Ivan Seidenberg said in a letter Monday.
Qwest chief executive Richard Notebaert fired back with his own letter: “Verizon, who has released no details of the underlying benefits of its offer, continues in its shrill attempt to change the focus away from delivering maximum value to MCI shareholders.”
The war of words played out in filings with the Securities and Exchange Commission, as the two business leaders stepped up their rhetoric in the takeover battle for long-distance provider MCI.
MCI shunned Qwest’s $8 billion offer in mid-February and instead accepted a $6.75 billion bid from Verizon, the nation’s largest telecom company with a market value more than 10 times Qwest’s.
After MCI shareholders protested, the Ashburn, Va.-based company opened a two-week negotiation with Qwest that ended Thursday with a new offer from Qwest that is now valued at about $8.3 billion.
MCI has said it would choose between the rival suitors by Monday. It has remained silent over the last week, as Verizon, Qwest and MCI shareholders have exchanged barbs. Some of the larger MCI shareholders still believe the Qwest bid is too low.
Notebaert complained in his letter that MCI refuses to speak with Qwest. MCI spokesman Peter Lucht rejected that complaint.
“Under our merger agreement with Verizon, we were limited to a two-week window, up until March 17, to have a dialogue with Qwest,” Lucht wrote in an e-mail to The Denver Post. “That period has expired.”
Seidenberg’s letter accused Qwest of “histrionics, false statements and grossly exaggerated synergy claims.”
What is most hotly contested is Denver-based Qwest’s assertion that it can reap $14.8 billion in cost savings by acquiring MCI. That’s about twice the amount claimed by Verizon.
Some analysts say MCI’s board will be faced with shareholder litigation, or a Qwest- sponsored proxy battle, unless it either accepts Qwest’s offer or negotiates better terms from Verizon.
Leon Cooperman, whose Omega Advisors hedge fund owns 3 percent of MCI, wants Qwest to sweeten the deal by boosting the cash or offering more guarantees.
Qwest’s latest offer stands at $25.60 per MCI share. It incudes $10.10 in cash, $15.50 in stock and a collar that protects MCI shareholders for up to a 10 percent decline in Qwest’s stock price.
Cooperman suggested Qwest sell $1 billion in new stock to a few big investors such as Warren Buffett or Philip Anschutz to increase the cash component of the deal.
Alternatively, Qwest could widen its collar.
“A wider collar would give the MCI board more confidence that the value will be the $25.60 (Qwest) says it is,” he said.
Staff writer Ross Wehner can be reached at 303-820-1503 or rwehner@denverpost.com.
