Qwest fights for MCI

Qwest Communications, in its continuing fight against Verizon to acquire MCI, has nearly concluded efforts to arrange an equity infusion of $2 billion.

Most of this additional equity would come from MCI shareholders and is conditional on the MCI board of directors’ endorsement of Qwest’s bid. Qwest has several options for pursuing its goal of acquiring MCI.

These include raising its current offer, taking its current offer or a revised offer directly to MCI’s shareholders, or staging a proxy battle for control of MCI.

Those close to the negotiations believe that a proxy fight can be avoided if Qwest can gain the support of MCI’s board for a revised bid.

Although MCI’s board has already rejected three of Qwest’s offers, it might change its mind if it can secure the commitment for additional equity from shareholders who have already declared their opposition to Verizon’s offer.

Those shareholders, a group controlling around 30 percent of MCI’s shares, include Carlos Slim, a millionaire from Mexico, who is MCI’s biggest shareholder.

Under the terms of a merger agreement between MCI and Verizon, however, Verizon can force a vote on its offer even if MCI decides in favor of Qwest’s bid.

This means that MCI would have to actively reject Verizon’s offer before considering the offer from Qwest.

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