NEW YORK – MCI Inc. (MCIP) on Saturday embraced a $9.75 billion takeover bid from Qwest Communications Inc. (Q), finally succumbing to pressure to scrap its lower-priced deal with Verizon Communications Inc.(VZ).
MCI said its board of directors, after shunning three prior bids from Qwest (search), had determined that the latest offer was superior to the long-distance phone company's $7.5 billion agreement with Verizon.
The announcement does not immediately swing the MCI board's recommendation away from the lower-priced Verizon deal. Under the terms of that agreement, such a change cannot occur until after the five-day waiting period.
Verizon's options include boosting its offer a second time or walking away with a sizeable breakup fee.
Alternatively, the New York-based phone company could call for an immediate vote on its deal by MCI shareholders, hopeful that enough are fearful of Qwest's shaky finances and strategic outlook.
Representatives of Verizon and Qwest did not immediately comment on MCI's announcement.
Should Verizon choose to pay more, it wouldn't necessarily need to match the $30 a share which Qwest offered Thursday.
MCI's board has twice accepted lower-priced deals with Verizon, so it's entirely likely that Verizon could prevail again with a lower bid. The current Verizon deal, for example, values MCI at $23.10 per share, or more $4.40 less than Qwest's previous offer of $27.50.
The MCI statement, which came several hours before a deadline set by Qwest in submitting its new offer on Thursday, said Qwest's proposal gives the board until May 3 to change its recommendation away from Verizon.