PHILADELPHIA – MCI Inc. (MCIP) said on Friday it would reopen merger talks with Qwest Communications International Inc. (Q), which has raised its bid for the long-distance telephone company to $9 billion.
MCI already has agreed to be acquired by Verizon Communications Inc. (VZ) for $7.6 billion, but it got permission from Verizon to renew negotiations with Qwest.
Shares of MCI gained 28 cents, or 1.1 percent, to $25.18 in morning trade on Nasdaq. Shares of Qwest fell 5 cents, or 1.35 percent, to $3.65, and Verizon gained 8 cents to $35.58, both on the New York Stock Exchange (search).
The takeover battle for MCI has lingered for seven weeks. Both Qwest and Verizon covet MCI's presence in the lucrative market of providing communications services to corporations. Qwest also wants MCI's cash flow to help pay down its own $17 billion debt load.
Despite having its previous overtures rejected by MCI, Qwest on Thursday returned with a revised bid that topped the value of Verizon's deal by 18 percent. Qwest also added more cash and improved protections against fluctuations in its stock price in an effort to address some of MCI's earlier concerns.
Ashburn, Va.-based MCI had cited Verizon's stable financial health and strong growth prospects as reasons for accepting the Verizon offer. But some large MCI shareholders have balked at the price and urged MCI to negotiate a more lucrative deal with Qwest.
Verizon said it plans to file a statement with regulators related to its sweetened pact with MCI. That revised agreement gives Verizon the power to force MCI to have its shareholders vote on the deal. No date for such a vote has been set.
Qwest has slammed that requirement, saying it compromised the bidding process since MCI shareholders would be forced to vote on an agreement even if the company's board supports a different bid.
Verizon said in a statement, "Verizon has a signed agreement with MCI that we believe will deliver superior value to MCI's shareholders."