MCI Faces Shareholder Criticism
MCI has faced some criticism for its decision to reject an offer from Qwest communications.
Some MCI shareholders will be voting against the company’s merger with Verizon.
“I haven’t found a single shareholder who supports Verizon’s bid,” said William H. Miller III, chief executive of Legg Mason Capital Management, which owns 5.6 million shares of MCI stock. “We are not going to support the Verizon bid. It’s irrational.”
In a statement, MCI said it “took into consideration a number of uncertainties in terms of value and likelihood of closing, including the negative sentiment among MCI customers toward a Qwest combination.”
According to a Washington Post article,
“Sources close to the board’s Tuesday night negotiations with Qwest said the board asked Qwest to raise its bid to $30 a share and assure MCI of a deal in the event unhappy MCI customers were to defect from a combined Qwest-MCI. Qwest chief executive Richard C. Notebaert rejected the request, sources said. Sources spoke only on condition of anonymity because of the privacy of the negotiations.
All parties have several options now. MCI could call for a shareholder vote on its agreement with Verizon and schedule action in June at the earliest. Or Qwest could come back to MCI with an increased offer that would prompt the long-distance giant to reconsider. Otherwise, Qwest could pursue more hostile actions, including soliciting support from MCI shareholders to vote down the Verizon deal, or call a special meeting to try to replace the existing MCI board.”
Qwest is optimistic that MCI shareholders who agree that Qwest gave the better offer, will come to the company’s rescue.
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