May 2, 2005

MCI's board of directors accepted a revised acquisition offer from Verizon Communications that raised the previous offer from $23.50 per share to $26 per share, and increased the total value from $7.8 billion to $8.5 billion.

MCI had previously accepted a higher bid from Qwest Communications International Inc. that was valued at $30.40 per share and a total price of nearly $9.9 billion.

The new Verizon offer consists of $5.60 in cash to be paid upon approval of the transaction, plus the greater of 0.5743 Verizon shares for every share of MCI common stock or Verizon shares or cash valued at $20.40. Verizon's previous offer consisted of $8.75 in cash and $14.75 in stock for each MCI share.

MCI's stock was trading down 11 cents per share early Monday at $26.42 per share, while Verizon's stock was trading down 20 cents per share at $35.60 per share.

Qwest's superior financial offer, which the company said was its final offer when disclosed last week, included $16.40 in cash and $14 in stock per MCI share.

MCI initially accepted the offer, but has repeatedly said it would prefer an acquisition by Verizon, which it deemed as having greater long-term security.

Qwest's stock was trading down slightly early Monday at $3.35 per share.

"From the standpoint of risk vs. reward, Verizon's revised offer presents MCI with a stronger, superior choice," said Nicholas Katzenbach, MCI board chairman.

"Shareholders receive enhanced value with greater assurance that the transaction will create additional shareholder value."

MCI's board also cited "the increasing need for scale and comprehensive wireless capabilities," of Verizon's offer as being superior to Qwest's larger financial proposition.

Verizon subsidiary Verizon Wireless is currently the nation's second-largest wireless carrier with more than 45 million subscribers, while Qwest recently sold its regional network to Verizon Wireless and transitioned its about 800,000 customers to Sprint Corp.'s wireless network under a mobile virtual network operator agreement.

Source: RCR News