Qwest Communications International has abandoned its pursuit of MCI, Qwest Chairman and Chief Executive Officer Richard Notebaert told shareholders on Tuesday.
Qwest confirmed the comments Wednesday. They appeared to end a bidding war between Qwest and Verizon Communications, which on May 2 announced it would acquire MCI for at least $26 per share. As with several earlier bids, MCI's board preferred Verizon's to a $30-per-share offer from Qwest in part because of Verizon's perceived greater financial stability.
Denver-based Qwest said in a statement then that it was no longer in the company's best interests to pursue the global long-distance and data carrier. However, some large MCI shareholders have expressed disappointment with the Verizon deal.
Notebaert was unequivocal in his comments Tuesday. Qwest believes it could have created more value for MCI shareholders, "but it became more and more apparent ... that there really wasn’t an effort to negotiate in good faith. And so, we did what we always do. After an extraordinary effort by scores of Qwest people, we stayed with our disciplined approach and we halted our efforts," Notebaert said in an address to shareholders in Denver, according to a transcript supplied by Qwest.
The company still may enter into partnerships, acquire smaller companies or buy assets that other carriers sell as the industry consolidates, he said. Qwest is the smallest of the major regional U.S. carriers and will face two much bigger rivals after Verizon closes the MCI deal and SBC Communications Inc. acquires AT&T.
The battle began in mid-February when MCI agreed to be acquired by Verizon for about $6.7 billion. The bidders came to the game with different financial situations: Verizon's debt at the end of 2004 was $39.3 billion, but its yearly revenue was $71.3 billion. Qwest had a full-year revenue of $13.8 billion for 2004, with a debt of $15.3 billion at the end of the year.
The Verizon-MCI deal, which remains subject to approval by regulators and MCI shareholders, could take a year to close, according to the companies.
Qwest bows out of MCI bidding, May 2, 2005
Verizon raises bid for MCI and retains favor of board, May 2, 2005