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Technology Stocks : Qwest Communications (Q) (formerly QWST) -- Ignore unavailable to you. Want to Upgrade?

To: GHowe who wrote (4492)	7/2/1999 6:34:00 PM
From: Nick	Respond to of 6846

Qwest Takes Lead as U S West, Frontier Agree to Talks (Update1) Bloomberg News July 2, 1999, 12:23 p.m. PT Qwest Takes Lead as U S West, Frontier Agree to Talks (Update1) (Adds Qwest stock price since it offered to buy U S West and Frontier in last paragraph. Updates stock activity.) Denver, July 2 (Bloomberg) -- Qwest Communications International Ltd. is having a good week in its battle with Global Crossing Ltd. to buy U S West Inc. and Frontier Corp., prompting some analysts to predict that Qwest will prevail. U S West said last night it will start talks with Qwest to consider its bid, even though Global Crossing's $33.9 billion agreement to buy the local-telephone company still is in effect. That came a little more than 24 hours after long-distance company Frontier, which agreed to be bought by Global Crossing for $12.9 billion, said it too will begin discussions to be sold to Qwest. Helping Qwest Chief Executive Joseph Nacchio gain the customers and phone networks he's seeking is the 12 percent drop in Global Crossing's stock this week. The decline makes Qwest's offers more attractive and increases the odds that the No. 4 U.S. long-distance company will succeed, analysts said. ''Qwest's probably going to be the winner,'' said Robert Wilkes, an analyst at Brown Brothers Harriman. ''Global's stock has pulled back, while Qwest's has held steady.'' Qwest said it hasn't begun talks with U S West or Frontier and hasn't signed a confidentiality agreement with either. ''Our intent is to begin discussions as early as later today or this weekend,'' said Mike Tarpey, spokesman for Qwest. U S West and Frontier officials declined to comment. Denver-based U S West shares rose 5/8 to 59 3/8 in late trading. Rochester, New York-based Frontier rose 1/4 to 59 3/16. Hamilton, Bermuda-based Global Crossing gained 1/4 to 40 1/4. Qwest fell 3/8 to 33. Qwest's bids are only guaranteed if its shares trade above $30.50. More Talks Qwest and Global Crossing, which is building a worldwide undersea telecommunications network, both want Frontier and U S West's 27 million customers to sell them new Internet and data services. U S West provides local services in 14 Western states. Global Crossing said it approved U S West's talks with Qwest. U S West said it also will talk with Global Crossing to see how the two-year-old phone company plans to respond to Qwest's latest offer of $69 a share, or $40.5 billion. Global Crossing is offering about $33.9 billion for U S West. Qwest raised its offers for U S West and long-distance phone company Frontier to $54.3 billion in June, after the two rejected an earlier proposal because of concern about a 24 percent drop in Qwest shares. Now, Qwest's talks with U S West and Frontier could pressure Global Crossing to sweeten its offers, analysts said. ''This has strengthened Qwest's position,'' said Tod Jacobs, an analyst at Sanford C. Bernstein & Co. who has a ''market perform'' rating on U S West. ''Qwest's offer is superior.'' Global Crossing shares have dropped about 15 percent since Qwest raised its offers, partly on concern Global Crossing would have to issue more stock to match the new bids. That's shaved about $2.5 billion off Global Crossing's agreement with U S West, pushing the value to $56.12 a share. Below U S West's Price Global Crossing's offer is below U S West's current price of 59 3/8, signaling that U S West investors expect the company to choose Qwest. Shares of acquisition targets typically trade as much as 10 percent below the value of an offer to reflect the risk the takeover won't be completed. For Frontier, which must stay on board for Global Crossing to complete its agreement with U S West, Qwest is offering $68 a share. Global Crossing's bid is $63. Nacchio told Qwest investors this week that he may take Qwest's offers directly to Frontier and U S West shareholders if the boards refuse to negotiate. Tom Burnett, president of New York-based Merger Insight, which tracks mergers and acquisitions, believes Global Crossing may concentrate on its bid to buy Frontier. ''It's less costly,'' he said, adding a purchase of Frontier could be completed by January. He expects any purchase of U S West to take at least a year because it will face tougher regulatory approvals. Also, if Qwest buys U S West, Global Crossing will get an $850 million breakup fee, Burnett said. Better Job Since Qwest unveiled its bids, the company has done a better job than Global Crossing of telling investors the advantages and disadvantages of the proposed acquisitions, some analysts say. This's helped keep Qwest's shares up. ''Global is unreachable and often doesn't return calls,'' said Burnett. ''Qwest is trying to win on all fronts. The momentum is beginning to turn towards Qwest.'' Still, neither company's shares have benefited from the takeover attempts. Qwest's stock has fallen about 26 percent since its bid to buy U S West and Frontier on June 13. On June 11, Qwest closed at 44 7/8.