Verizon is buying 13.4 percent of MCI from Mexican teleco magnate Carlos Slim Helu, just days after MCI agreed a takeover bid from the giant telco.
It will pay $25.72 per share in cash for 43.4 million MCI shares held by eight affiliates of Slim. But that price is more than the $23.50 cash and share deal Verizon has offered to other MCI shareholders and is just under the stock's Friday closing price of $25.84. It is also far less than the $27.50 cash and share counter-deal proposed by Qwest.
The deal has been criticised by the CEO of Legg Mason Capital Management, Bill Miller, who wrote in a letter to MCI's board that Verizon's higher offer to Slim confirmed that its previous $23.50 offer should not be accepted.
MCI's board has already accepted Verizon's offer and last week rejected Qwest's latest proposal despite its higher value.
"Shareholders would be outraged if the board did less than insist that the identical terms be made available to all other owners," Miller wrote in the letter that was made available by the company. Miller said an equivalent offer should be valued at at least $27 per share to take into account that other shareholders aren't being offered an all-cash deal.
"For the board to continue to insist that the prior offer of $23.50 is sufficient and fair would be unconscionable," he wrote. "If presented with any offer from Verizon that is less than the present value of what they are paying Mr. Slim, we will vote against it."
After having its revised offer turned down by MCI's board last week, Qwest put hope in such pressure from MCI shareholders of being some support to its proposed offer.
Slim is the world's fourth richest man and has a fortune of $23.8 billion, according to Forbes. His empire includes retail, banking and insurance but was built on the back of telecos.
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