MCI Says Won't Lower Takeover Guard


PHILADELPHIA (Reuters) - MCI Inc. said on Monday it had no plan to amend a poison pill that helps thwart unwanted takeovers, and reaffirmed its aim to get the best takeover deal for all shareholders despite a lucrative private pact forged by its largest shareholder. Verizon Communications Inc. (VZ.N: Quote , Profile , Research ) , which plans to buy MCI (MCIP.O: Quote , Profile , Research ) for $7.6 billion, said on Saturday it agreed to buy the 13.7 percent stake of MCI held by Mexican telecommunications magnate Carlos Slim Helu for $1.1 billion in cash. Verizon offered Slim about 20 percent more for his MCI shares than other shareholders would get under the takeover deal. MCI said that pact was a private transaction between Verizon and Slim. By paying Slim more, Leon Cooperman, chairman and chief executive of Omega Advisors Inc., said Verizon essentially created two classes of MCI shareholders, which he called unacceptable. "It is a requirement that all shareholders be treated equally," Cooperman said. Omega Advisors owns about 3 percent of MCI's stock and owns shares of Qwest. Cooperman and other large MCI shareholders have balked at the Verizon deal, saying the offer was too low. MCI, the No. 2 U.S. long-distance telephone company, had rejected a $9.1 billion offer from Qwest Communications International Inc. (Q.N: Quote , Profile , Research ) in favor of the lower bid from Verizon. MCI said it preferred Verizon's more stable financial health and feared that customers would be skittish about a deal with Qwest, the No. 4 U.S. local telephone company. Qwest said in a statement Monday that if MCI had wanted the best deal for shareholders, it would not have rejected Qwest's offer. "It appears the MCI Board supports a two-tiered offer from Verizon that ranks the interests of one share owner ahead of all others," Qwest said. In recent days, shares of MCI have traded above Verizon's bidding price on expectations that the No. 1 U.S. telephone company would have to hike its offer to prevent Qwest from launching a hostile bid. Shares of MCI closed at $26.01, up 17 cents, or 0.7 percent, on Nasdaq. Verizon agreed to pay $23.50 for each share of MCI. "Qwest and Verizon will derive tremendous value from MCI. Each could easily pay 30 dollars per share and still have a tremendous acquisition," said Bruce Berkowitz, chief executive of Fairholme Capital Management LLC, which owns 11 million shares of MCI. "We ask that the board negotiate with Qwest and Verizon in good faith to get their best and final offers on behalf of all MCI shareowners," Berkowitz said.
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