May 03, 2005
Qwest's Quest Ends
Posted by Christine Hurt

Prof. R. and Prof. B continued to debate whether the MCI board missed the boat by choosing Verizon ($26/sh) over Qwest ($30/sh).

Larry points out that the bidding merely resulted in a wealth transfer from Verizon to MCI's shareholders, which could hardly benefit Qwest.  If would-be bidders get no benefit from bidding, then they will think twice about launching such a mission again. 

However, Qwest may get a benefit.  If you could think of a way to make your competitor lose about $1.75 billion, you might be willing to make that happen.  If Qwest had not entered the fray, Verizon would have paid $6.75 billion for what it will now pay $8.44 billion.  I'm not saying that this was Qwest's goal all along, but it is a silver lining.  I think Prof. B noted that if Qwest had been seriously pursuing MCI that Qwest could have at least launched a proxy contest, given the MCI poison pill.  However, as readers have pointed out to me, the MCI poison pill was completely chewable.  If Qwest had a majority of non-Qwest shareholders, it could have launched the tender offer at any time.  Hmmm.

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