Qwest Weighs MCI Sweetener
Qwest
(Q)
will sweeten its bid for
MCI
(MCIP)
next week,
Reuters
reported, citing unnamed "sources familiar with the situation."
Qwest didn't immediately return a call seeking comment.
The news comes a week after MCI's chosen suitor, New York telco giant
Verizon
(VZ) - Get Report
, cleared long-distance service provider MCI to talk with Qwest for two weeks. Verizon's blessing was necessary because its agreement to buy MCI includes a noncompete clause. Verizon said it waived that clause temporarily to clear the air about the relative merits of the Verizon and Qwest bids for MCI.
Another sweetened bid would represent Qwest's latest attempt to get back in the game with MCI.
Last month, Qwest twice offered to buy MCI for some $8 billion in cash and stock. MCI rebuffed the bids in favor of a $6.7 billion deal with Verizon, citing Verizon's financial strength and its leadership in the fast-growing wireless services business, a business Qwest has been effectively shut out of.
Some large MCI shareholders have balked at the Verizon price and urged MCI to reconsider a merger with Qwest, even though breaking up the Verizon deal would cost MCI $200 million and stick it with a lower-quality competitor in the cutthroat telecom business.
Last week Qwest set off a rally in its stock by promising mass firings should it complete the MCI deal, but those gains have since dissipated.
On Friday, the market shrugged off news of Qwest's latest efforts, with Qwest rising a penny to $3.85 and MCI adding 2 cents to $23.75.
"I think if Qwest had a realistic chance at getting MCI, you'd see the stock around $4.50," said a hedge fund manager with no positions in any of the involved stocks. "But the market doesn't seem to think they have a shot."