Just when you thought the furore surrounding the purchase of MCI had died down, it starts up again.
MCI shareholder Deephaven Capital Management is now asking for wider support to block Verizon's acquisition plan.
MCI's board of directors finally approved a bid of $26 per MCI share from Verizon on 2 May, having spent three months playing courtesan to both Verizon and rival bidder Qwest as each company increased their offers.
Qwest final final offer of $30 a share, despite being higher, was rejected in favour of the "superior" Verizon bid, the MCI Board decided. For this reason Deephaven opposes the merger and favours Qwest's higher bid.
Deephaven manages funds holding almost 5 percent of MCI shares, and will use them to vote against acceptance of Verizon's bid at a forthcoming special meeting of stockholders, according to documents filed with the US Securities and Exchange Commission on Wednesday. It also solicited proxies from other MCI shareholders to vote against the Verizon deal.
In addition to the 16,118,185 shares of MCI stock it controls, Deephaven also has beneficial ownership of 800,100 shares of Qwest stock, according to the filing. It owns no Verizon shares, but has an aggregate short position of 4,367,649 shares, meaning it expects Verizon's share price will fall. In addition, Deephaven owns $194,453,656 in MCI bonds and $78,887,000 in Qwest bonds.
The merger requires the approval of a majority of MCI's outstanding shares.