I wish this would go away.
By Jessica Hall
NEW YORK, June 8 (Reuters) - Shares of Global Crossing Ltd. (NASDAQ:GBLX) rose six percent on Tuesday amid market rumors its merger partner U S West Inc. (NYSE:USW) may get a new buyout offer, which would allow Global Crossing to exit a deal investors have frowned upon.
Qwest Communications International Inc. (NASDAQ:QWST) is continuing to mull a possible bid for U S West in an effort to woo U S West away from its $37 billion marriage with Global Crossing, a source familiar with the situation said.
Qwest, the No. 4 U.S. long distance company, has made preliminary moves to find advisors to help it prepare a possible bid and to potentially line up partners to launch a joint bid, the source said.
Qwest's previous investment banker, Salomon Smith Barney, is currently advising Global Crossing in its deal with U S West, leaving Qwest searching for a new advisor.
Qwest and U S West declined to comment. Global Crossing could not be immediately reached for comment.
Qwest's interest in U S West is not new.
When U S West and Global Crossing were trying to finalize their $37 billion deal, Qwest approached U S West about a possible deal and asked for more time to prepared a bid. U S West, however, decided to proceed with the Global Crossing deal and rebuffed Qwest's advances, sources familiar with the situation previously told Reuters.
Qwest has not formally approached U S West since then, several sources said on Tuesday.
Shares of Global Crossing gained $2.75 to close at $50.75 on Nasdaq. The gains in Global Crossing followed its upbeat presentation at an investor conference on Monday. The stock also moved higher after cable television news station CNBC reported on Tuesday that Qwest was still considering making a move for U S West.
CNBC said Qwest is trying to line up a partner that could add cash to a possible joint bid.
A possible bid by Qwest could provide telecommunications upstart Global Crossing a graceful exit, allowing it to take the $850 million break-up fee and shop for new deals. Shares of both Global Crossing and U S West have languished since their deal was announced on May 17.
One analyst, however, said he doubted Global Crossing's founder Gary Winnick, a former associate of junk bond king Michael Milken, would be out-manuevered by Qwest.
Other analysts downplayed the possibility of Qwest launching a counterbid for Qwest since Qwest already has a relationship with BellSouth Corp. (NYSE:BLS), the Atlanta-based Baby Bell. BellSouth owns about 10 percent of Qwest.
BellSouth and Qwest could conceivably work together to buy U S West. The benefits of such a deal remain unclear since BellSouth and U S West operate in opposite sides of the country and a combined U S West-Qwest-Bellsouth would see minimal cost savings, analysts said.
"The benefits for BellSouth to pony up some money are very unclear," said one analyst who declined to be named.
BellSouth could not be immediately reached for comment.
Another complication is that under the Global Crossing-U S West deal, U S West agreed to buy 9.5 percent of Global Crossing in a cash tender offer, regardless if the companies merge. Any buyer of U S West would have to resolve that relationship.
The renewed rumors of a possible Qwest bid came as a U.S. Appeals Court agreed on Tuesday that a 1996 law barred Baby Bells such as U S West and Ameritech Corp. (NYSE:AIT) from selling Qwest's long distance services from Qwest.
Both Global Crossing and Qwest are scheduled to speak on Wednesday at the PaineWebber Growth & Technology Conference in New York.
U S West fell 62.5 cents to $53.25 on the New York Stock Exchange. Analysts said the stock would have rallied if investors believed a new bid from Qwest was likely.
Shares of Qwest fell $1.75 to $43.31 on Nasdaq.
Copyright 1999, Reuters News Service
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