[WSJ: Qwest Enters Talks With U S West, Frontier as Bids Are Ruled Worthy]
NEW YORK -- Qwest Communications International Inc. has entered into talks with U S West Inc. and Frontier Corp. after both companies declared Qwest's unsolicited bids for them worthy of consideration.
In what is shaping up as a spirited, protracted takeover battle, Denver-based Qwest is aiming to break up agreements U S West and Frontier have to merge with Global Crossing Ltd., an undersea cable operator based in Hamilton, Bermuda. Qwest and U S West had no comment on the status of their negotiations.
Global Crossing, meanwhile, is expected to file documents Tuesday with the Securities and Exchange Commission seeking permission to speak to investors about the strategy behind its deals with the companies, according to people close to the situation.
Since Qwest launched its unsolicited bids on June 13, Global Crossing has been restricted from talking about its strategy with investors because it already has deals with U S West and Frontier.
Sell Qwest's Case to Investors
Qwest and its chief executive, Joseph P. Nacchio, have used the opportunity to sell Qwest's case to investors. Many initially were skeptical of Qwest's $47 billion bid to buy both U S West and Frontier, sending Qwest's stock down as much as 25% and forcing Qwest later to increase its bids.
But in recent days, the momentum has swung the other way. Qwest's stock price has stabilized and Global Crossing's has been falling, eroding the value of Global Crossing's bids for the companies and making Qwest's offers more attractive.
Both Qwest and Global Crossing have said they are seeking to acquire Frontier and U S West in an effort to build large-scale, full-service telecommunications companies.
Global Crossing's bid for Frontier stands at about $11.1 billion, compared with almost $12 billion Qwest is offering for the Rochester, N.Y., local and long-distance phone company. Qwest is offering about $35 billion for the Denver-based U S West, the smallest of the regional bell companies, compared with Global Crossing's bid, valued at about $28 billion based on Friday's closing stock price.
Definitive Merger Agreement
Global Crossing's definitive merger agreement currently calls for U S West shareholders to receive about 1.35 shares of Global Crossing for every U S West share, plus a special one-time dividend of as much as $1 a share.
In Nasdaq Stock Market trading Friday, Global Crossing was unchanged at $40, and Qwest fell 12.5 cents to $33.25. U S West rose 62.5 cents to $59.375 in New York Stock Exchange composite trading, giving the Bell telephone company a market capitalization of about $30.2 billion on a fully diluted basis.
Separately, Global Crossing said its Global Crossing Ireland subsidiary reached an agreement with the Irish government to build an undersea cable system connecting Irish corporations to major European cities.
Global Crossing said the Irish government will be the anchor tenant on the system under an $80 million agreement. |
