The way things stand, looks like Verizon is going to pass on MCI, and has let a key deadline pass without as much as peep. That means, now if MCI board decides to go with Qwest, Verizon is going to be $250 million richer. Elsewhere, Qwest is threatening to pull out of the deal, if MCI board doesn’t switch support to Qwest by Monday midnight. Associated Press quotes an anonymous source close to Qwest as saying that four more MCI shareholders are looking to pump in cash in case Qwest has to boost its bid beyond the current $30 a share. I am not sure, what the point of all this bidding really is. I don’t think MCI is worth the price Qwest is willing to pay, or for that matter even Verizon.
Verizon’s reticence could be explained by increased opposition to the bid on Wall Street. “At these kind of high prices, why is Verizon doing this?” Jean Liu, an equity analyst at Victory Capital Management told Reuters, and added, “They’re acquiring a lower-revenue asset, and if their focus is really wireless … why are they going after something that is not their growth focus?” Yankee Group estimates that you can really replicate MCI’s network for half the $7.5 billion price Verizon is willing to offer for MCI. Are MCI customers worth that much money?