QWST ponders raising bid:
Qwest Is Close to Raising Bids
For U S West and Frontier
By REBECCA BLUMENSTEIN
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- Qwest Communications International Inc. is close to
increasing its bids for U S West Inc. and Frontier Corp., according to
people close to the situation.
Although the situation is fluid, Qwest's board is scheduled to meet
Wednesday morning to consider various options to increase the unsolicited
offers it made for U S West, a Denver-based Bell company, and Frontier,
a Rochester, N.Y., long-distance company, on June 14.
To be sure, the board can decide to remain
pat. Qwest's bids for the companies were at
first financially superior to those made by their
original suitor, Global Crossing Ltd. But the
value of the bids fell as Qwest's stock
dropped as much as 25% last week. The
stock of the Denver long-distance company
has since rallied back a bit as its chief
executive, Joseph P. Nacchio, has sought to
explain the reasoning behind his bids to
investors. Qwest's shares closed Tuesday at $35.3125, down $1.3125,
on the Nasdaq Stock Market.
But in recent days, there has been little difference in the financial value of
the bids from Qwest and Global Crossing. Accordingly, the boards of
Frontier and U S West have both voted to stick with their original
agreements with Global Crossing, having little incentive to go with Qwest.
Subsequently, the pressure is building for Qwest's Mr. Nacchio to either
walk away from his offer or put more money or stock on the table. People
close to the situation say that Qwest could increase its offer for one or
both companies, or put a collar on the deal that guarantees shareholders of
U S West or Frontier a minimum share price. Such a move could ease
concerns about Qwest's volatile stock, a factor the U S West board raised
when it turned down Qwest's bid late Monday.
Mr. Nacchio has said that he has access to sufficient cash to win the battle.
He secured $4 billion in financing before launching his bids, and recently
received an additional $2 billion in cash from BellSouth Corp., which
recently bought a 10% stake in Qwest for $3.5 billion.
"I could take it up a couple of billion," Mr. Nacchio said in an interview
Monday. He said he also could line up partners to help him top Global
Crossing's offer more decisively. People close to Global Crossing said the
company remains committed to its merger agreements with U S West and
Frontier and doesn't plan to take any action at this time. On Monday,
Qwest filed the necessary documents to commence a hostile takeover.
For U S West, Qwest is offering as many as 1.783 shares of Qwest for
every U S West share outstanding, or about $65.30 a share. Global
Crossing is offering about 1.29 shares for every U S West share, or about
$61 a share. Global Crossing's bid includes a one-time special dividend of
as much as $1 a share to U S West shareholders in connection with the
merger.
Look for USW to fly, QWST to sink some more, and GBLX to rally.
Also, there is a lot of talk that BLS wants Nacchio to run the whole shebang: Message 10233657 -
We are in the top of the 3rd inning in this puppy, imo. larry
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