Denver – A hedge fund said today it plans to solicit MCI Inc. shareholder support to defeat Verizon Communications’ $8.5 billion takeover and persuade Qwest Communications to offer a new bid.
In a Securities and Exchange Commission filing, Deephaven Capital Management, an MCI shareholder, said it would solicit proxies from other shareholders to vote against the Verizon-MCI merger.
Deephaven portfolio manager Matt Halbower said in a telephone interview the company has contacted Qwest Communications International Inc., but he does not know if it will resurrect its $9.85 billion bid for MCI.
“I’m hopeful, but ultimately it’s going to be their call,” Halbower said. “If the path exists because Deephaven is successful in collecting a majority of the proxies, I think it would be the right decision.” A Qwest spokesman declined to comment.
Qwest Chief Executive Officer Richard Notebaert said last month the company had ended its three-month pursuit of MCI, but a source close to the company who asked not to be identified said today that if the shareholders defeat the vote, Qwest executives may review their options.
Representatives of MCI and Verizon both said they believe the merger of their companies remained in the best interest of their shareholders. A shareholders meeting to vote on the merger has not been set, but is expected in July.
Based in Minnetonka, Minn., Deephaven owns about 16 million shares of MCI and nearly 1 million Qwest shares.
The Denver-based Qwest provides local phone service in 14 mostly Western states.
In late trading on the New York Stock Exchange, Verizon shares rose 15 cents, or 0.4 percent, to close at $35.16 a share and Qwest stock closed flat at $3.68. MCI shares increased 21 cents, or 0.8 percent, to close at $25.70 a share on the Nasdaq Stock Market.
