Qwest Communications International Inc. isn’t ready to give up on its campaign to acquire MCI Inc.
Qwest plans to submit a renewed — and possibly sweetened — bid for MCI after being snubbed by the long-distance company in favor of a $6.7 billion cash-and-stock bid from Verizon earlier this week.
In a letter to the MCI board dated Thursday, Qwest Chairman and CEO Dick Notebaert said he hoped the modified offer would lead to discussions, noting that MCI never responded to Qwest’s initial bid.
“If we had received this response, we may have been already able to communicate to you a modified offer that would be beneficial to MCI shareholders,” he wrote.
The Verizon proposal was substantially less than the Qwest bid based on public comments this week from MCI President and CEO Michael D. Capellas, Notebaert said.
“We would like to advise you that once we have completed our review of the Verizon merger agreement, we do intend to submit a modified offer to acquire MCI,” he wrote.
The letter to Ashburn, Va.-based MCI was contained in a Securities and Exchange Commission filing Thursday.
Verizon declined specific comment. “The facts are that the MCI board and the (Verizon) board both approved the transaction and there is a signed letter of agreement,” spokesman Eric Rabe said in an e-mail.
MCI did not respond to a request for comment.
Qwest spokesman Tyler Gronbach said the company has received a lot of calls from both large and small MCI shareholders seeking more information about the Qwest bid.
Qwest on Wednesday released terms of its failed bid, saying that the total effective value was about $8 billion, including $1.60 a share in dividends, which was more than $1 billion above Verizon’s offer.
Denver-based Qwest offered $23 a share to MCI stockholders, consisting of $7.50 a share in cash and $15.50 of Qwest common stock, based on a fixed exchange ratio of 3.735 Qwest shares per MCI share.
Verizon proposed a deal in shares, cash and dividend payments valued at $6.76 billion, or about $20.75 a share.
Analysts said Verizon, the dominant local phone company in the Northeast and a top cellular player, likely won MCI’s favor because it is larger and in better financial shape than Qwest, the local phone carrier in 14 Western and Midwestern states.
Qwest is weighed down by more than $17 billion in debt, the lack of a wireless division and competition from cable and high-speed data companies.
Janco Partners research analyst Donna Jaegers said it could be a win-win situation for Qwest. “If they sweeten their bid enough and they get MCI, then they improve their balance sheet,” she said. “Worst case is they force Verizon to pay more money so they make them less competitive. I don’t see a whole lot of risk in Notebaert doing this.”