The bidding war for MCI, the long-distance US telecommunications company, entered a new phase after its board accepted an improved offer from Verizon Communications, the biggest telecoms operator in the US.
The decision to agree to a $7.6 billion (€5.8 billion) takeover offer worth $23.5 per share that Verizon made yesterday leaves Qwest Communications, which has already made several bids for MCI, sidelined again, despite its $26 per share offer.
"Verizon's substantial increase in its offer, the strength of its competitive position and the financial certainty at [the deal's] close make this offer compelling to our shareholders, customers and employees," said Nicholas Katzenbach, chairman of MCI's board.
MCI, which emerged from the bankrupt WorldCom last year, has numerous corporate and government customers, which could be valuable to Verizon or Qwest.
The company agreed a $6.75 billion takeover with Verizon last month, despite having received a higher offer from Qwest.
It favoured Verizon because of its greater financial strength and said Qwest's $17 billion debt might weaken a combined company.
But protests from MCI's shareholders pushed the board to hold discussions with Qwest in the last four weeks. During that time, Qwest increased its offer to $26 per share, a combination of cash and shares.
The board has now opted to reject Qwest and favour Verizon.
On the table is $23.50 a share, including $8.75 per MCI share in cash and $14.75 per MCI share in Verizon stock. Qwest said it would "assess the situation".
