Qwest raises offer to acquire MCI to nearly $8.5 billion

Bruce Meyerson

Thursday, March 17, 2005 | 11:02 a.m.

NEW YORK -- Qwest Communications International Inc. today offered $8.45 billion to acquire MCI Inc., adding nearly a half-billion dollars to its bid to break up the long-distance phone company's planned merger with Verizon Communications Inc.

The sweetened offer, worth about $1.8 billion more than the current value of MCI's agreement with Verizon, was presented to MCI's board on Wednesday in a meeting that stretched into the night.

MCI, which changed its name from WorldCom a year ago, said today its board will respond to Qwest's new offer by close of business on March 28.

MCI shares fell 29 cents to $23.46 in morning trading on the Nasdaq Stock Market. Qwest shares slipped 7 cents to $3.75, while Verizon shares lost 15 cents to $35.19 on the New York Stock Exchange.

Qwest's offer reaffirmed forecasts that its deal could produce twice as much cost savings as Verizon's. Qwest also said MCI's lawyers apparently agreed during talks over the past two weeks that a Qwest deal would gain government approvals quicker than a Verizon merger, which Qwest says would hurt market competition.

Verizon has asserted just the opposite, and today reiterated its contention that Qwest and its offer were financially unsound. The company declined to say whether it might consider paying more in light of the new Qwest offer.

Qwest, in a letter to MCI's board, said "MCI's legal counsel has acknowledged that the Qwest/MCI transaction could close more quickly than a Verizon/MCI transaction, although they did not agree with us as to how much more quickly."

Qwest's original proposal of $8 billion was turned down by MCI in favor of Verizon's bid out of concerns about Qwest's weak financial health and questionable business prospects.