Dow Jones Newswires -- October 7, 1999
Dow Jones Newswires
Takeover Talk Ups Qwest, Global Crossing On Huge
Volume
By Shawn Young
NEW YORK -- Shares of Global Crossing Ltd. (GBLX) and Qwest Communications
International Inc. (QWST) rose in torrential trading Thursday on speculation that the companies
could be takeover targets for BellSouth Corp. (BLS).
BellSouth, the Baby Bell based in Atlanta, lost a bidding war for Sprint Corp. (FON) to No. 2
long-distance carrier MCI WorldCom Inc. (WCOM) late Monday. Sprint, Kansas City, Mo., and
MCI WorldCom, Clinton, Miss., announced their $115 billion merger - the biggest ever - on
Tuesday.
The deal raised the already enormous stakes in the telecommunications merger game and removed
Sprint, one of the most desirable merger partners, from the mix. Now that BellSouth has shed its
long-held status as a holdout in the merger activity, there is intense speculation about what it might
buy.
"Everybody has been saying that BellSouth got to the station as the train was pulling out and it
needs to do something," said Tom Burnett, founder of Merger Insight, a New York research firm
that focuses on corporate takeovers.
The talk has focused on Global Crossing and Qwest, two high-flying long-distance upstarts that
recently were in the merger market as buyers, not targets.
With Sprint out of the mix, Qwest or Global Crossing could look attractive to a number of
companies, including perhaps BellSouth, which already has a stake in Qwest.
The companies could not immediately be reached for comment.
Trading volume in Global Crossing was 52 million shares, compared to a daily Nasdaq average of
7 million. The stock rose 3 3/8, or 11.8%, to 31 7/8 recently as Qwest shares rose 1/16, or 0.2%,
to 35. Nasdaq volume in Qwest shares was 16.1 million, compared to a daily average of 8.2
million.
The volume, though tremendous, was not a record for either company. Both stocks have been
enormously active in recent months as the companies fought a dramatic bidding war to buy Frontier
Corp. and US West Inc. (USW). They ended up dividing the targets, and Global Crossing has
already closed its deal with Frontier.
NYSE-listed BellSouth shares were up 3/16, or 0.3%, to 42 7/8 on volume of 2.9 million,
compared to a daily average of 2.5 million.
BellSouth shares should have bounced upward when BellSouth didn't win the fight for Sprint,
Burnett said. Shares of would-be buyers often drop as investors anticipate dangers like bidding
wars or earnings dilution. Often when a buyer withdraws, its shares rise.
The failure of BellSouth stock to do so is being interpreted as significant, Burnett said.
"The market is telling us that BellSouth has something up its sleeve," he said.
-By Shawn Young, Dow Jones Newswires; 201-938-5248 shawn.youn |
