April 25, 2005 Ashburn, VA -- MCI today announced that its board of directors has determined that Qwest Communications' latest offer to acquire the company is superior to the terms of the current MCI/Verizon merger agreement. Under the terms of that agreement, Verizon has five business days to respond with a revised proposal. Under Qwest's irrevocable offer, MCI's board of directors has until May 3, 2005 to change its current recommendation in favor of the MCI/Verizon merger agreement.
On April 21, 2005, Qwest presented MCI with a revised offer comprised of $16.00 in cash (excluding MCI's March 15 dividend payment of $0.40 per share) and 3.373 Qwest shares (subject to adjustment under a collar which fixes the value of the Qwest shares at $14.00 provided Qwest's share price is between $3.32 and $4.15) per MCI share.
On March 29, 2005, MCI and Verizon amended their merger agreement. Under that agreement, each MCI share would receive cash and stock worth at least $23.10, comprising $8.35 (excluding MCI's March 15 dividend payment of $0.40 per share) as well as the greater of 0.4062 Verizon shares for every share of MCI Common Stock or Verizon shares valued at $14.75.
In response to the MCI's announcement, Qwest today issued the following statement:
"Qwest is gratified that MCI has recognized its superior offer for MCI. Through this combination, both the fundamental economics and the future competitive landscape of the telecommunications industry can be aligned to deliver long-term value for investors, robust competition, and better services for customers. We expect MCI to build upon its declaration of superiority with specific acts of support, including expeditiously seeking regulatory approvals of a transaction that it considers superior and in the best interests of its shareowners."
Also today, Verizon issued the following statement:
"Today MCI reiterated what it expressed over two weeks ago - namely that it would deem a Qwest offer of $30 to be superior to the $23.10 provided under the current Verizon-MCI merger agreement - apparently concluding that the difference was sufficient compensation for the increased risks associated with completing the transaction and executing the business plan thereafter.
Verizon believes its pending transaction with MCI creates long-term, as well as short-term, value for the shareholders of both companies by protecting the integrity of MCI's business, ensuring that MCI's customers have continuing access to the best communications services, retaining key employees, and stabilizing MCI's financial position and prospects.
Under the terms of the Verizon-MCI definitive merger agreement, Verizon may elect to require MCI to continue to finalize its proxy statement and to organize a meeting of MCI's shareholders to consider the agreed transaction with Verizon. Alternatively, Verizon may elect to terminate the agreement with MCI. Upon such a termination, Verizon would be entitled to be paid by MCI a $240 million break-up fee plus an expense reimbursement of up to $10 million, and the same amounts would be payable following an MCI shareholders meeting if the Verizon-MCI transaction were not approved and an agreement was signed with Qwest.
In light of the change in this process, we will consider all of our options and determine how best to serve Verizon shareholders."