My post the other day on Verizon's side deal with MCI's largest shareholder spawned other questions about Qwest's strategy in light of MCI's poison pill.  Although the poison pill is reported to be chewable, the share rights plan is only revoked if a would-be acquirer can garner 51% of the shareholders and the premium paid is 25% over the share price of MCI coming out of bankruptcy.  This price would be in the $31/share range.  (If anyone can find a copy of the plan, let me know.  I could not find it anywhere on MCI's website, even though the Articles, Bylaws, and other materials are there.)

Of course, Qwest could announce a tender offer at its current price, conditioned on the revocation of the rights plan, at the same time that it tries to enter into a proxy fight to have a majority of the shareholders revoke the rights plan.  It has not shown signs of doing so.  Why not?  If I were counsel to Qwest, I might suggest holding off on the tender offer as well if the first step is to fight the rights plan or to enter into litigation claiming that the MCI board has violated its duty of care to the shareholders.  From teaching the Blasius, Stahl, MM Companies line of cases, the Delaware court seems to allow boards more leeway in fighting off tender offers than in thwarting shareholder's rights to the proxy machinery.  So, as long as Qwest is acting as a shareholder and not as a hostile acquirer, then the probability of a court eventually being sympathetic to Qwest is higher.

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