March 02, 2005
the MCI battle
Posted by David Skeel

The MCI battle raises, or may soon raise, a very interesting Revlon issue that seems to get lost in the media accounts.  The current Verizon deal consists of $6 in cash and stock now worth abt $14.70, whereas the Quest bid is $9.10 in cash and $15.50 of stock.  Under standard Revlon analysis, MCI's acceptance of the Verizon bid might not trigger Revlon's duty to seek the best reasonably available deal, since it's mostly a stock-for-stock deal.  But there's a significant cash component; and Strine's handling of the PeopleSoft-Oracle wrestling match seems to suggest that the Del chancery court may be a bit reluctant to simply allow MCI to stiff arm Quest's significantly higher offer.  And if Verizon adds cash to its deal, it strikes me that we may quickly be in traditional Revlon mode.  Either way, it sure looks like we're headed for an auction.

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