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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: biffpincus who wrote (1250)	6/29/1999 7:24:00 AM
From: John Carragher	Respond to of 15615

June 29, 1999 Frontier's Board Continues To Consider Qwest's Offer By STEPHANIE N. MEHTA and REBECCA BLUMENSTEIN Staff Reporters of THE WALL STREET JOURNAL NEW YORK -- Frontier Corp.'s board will continue to evaluate Qwest Communications International Inc.'s revised bid to acquire the company for almost $12 billion. Separately, the Rochester, N.Y., telephone company said its second-quarter earnings will be lower than Wall Street expectations. The company attributed the projected shortfall to price erosion created by competing carriers. Traditional long-distance phone services "are fast becoming commoditized in this industry," said Rolla P. Huff, Frontier's president. The board's decision to further evaluate the Qwest offer is significant because Frontier could have decided to "take no action" on the offer. As it is, the move becomes the latest development in a takeover battle that pits Qwest, the nation's fourth-largest long-distance carrier, against Global Crossing, an undersea cable operator. Frontier is especially important to Global Crossing: Its definitive merger agreement with U S West Inc. hinges on the successful acquisition of Frontier. For Qwest, which raised its bid for Frontier last week, the board's decision is a victory of sorts, because it suggests Frontier is seriously weighing its revised bid. Its offer is $68 a share in stock and cash, valuing the total bid at almost $12 billion, or about 7% higher than the bid from Global Crossing. Indeed, people close to Qwest have argued that Frontier's board has a fiduciary responsibility to deem the offer superior, enabling the two companies to enter negotiations. Qwest's chairman, Joseph P. Nacchio, Monday sent a letter to shareholders indicating the company is committed to pursuing -- and winning -- both Frontier and U S West, the Denver-based Baby Bell that Qwest also aims to buy. "As circumstances change, we may consider adopting different strategies to encourage U S West and Frontier, or their shareholders, to accept our offers, and we may set a deadline," he wrote. Options available to Qwest include lawsuits against the boards of Frontier and U S West, proxy fights or hostile tender offers in which it asks shareholders of U S West and Frontier to tender their shares directly to Qwest. In a statement late Monday, Qwest said it will not revise its proposal to acquire Frontier based on issues discussed in Frontier's earnings-revision statement. Qwest officials, meanwhile, have been working hard to win support for their revised bids from investors and analysts, with some success. Qwest's bankers, Donaldson, Lufkin & Jenrette Securities Corp., sent a presentation to board members of both U S West and Frontier Monday detailing why the bid is superior. People close to Qwest argued that the Frontier board faced a potential backlash from shareholders if it decided to not fully consider Qwest's latest offer. These people said the language in Frontier's agreement to merge with Global Crossing obligates Frontier to enter into negotiations with another party if another offer is presented that is only reasonably superior. People close to Global Crossing, however, said any competing bids must be clearly superior. Qwest is seeking to acquire both Frontier and U S West to become a telecom powerhouse. U S West, which serves 14 states and has 25 million customers, would provide a strong base for Qwest's national aspirations, while Frontier's local phone business could provide a launching pad in the Northeast. Founded in the late 1980s by railroad magnate Philip Anschutz, Qwest is building a nationwide network that follows railroad rights-of-ways. Mr. Anschutz owns 40% of the company. Global Crossing, Hamilton, Bermuda, burst onto the scene earlier this year by unexpectedly snagging agreements with U S West and Frontier. The company operates an undersea cable linking the U.S. and Europe and is building land-based and undersea networks world-wide. Global Crossing said in a statement that it remains "excited" about its definitive merger agreement with Frontier, despite the projected shortfall in earnings. Frontier said second-quarter earnings would be in the range of 20 cents a share to 22 cents a share -- six cents to eight cents below Wall Street expectations. Return to top of page \| Format for printing Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved.