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NEW YORK (CNN/Money) -
Qwest Communications may again bid for MCI if there is a large shareholder vote against MCI board members, according to a published report.
The Wall Street Journal reported that several large MCI (Research) investors are saying they will withhold their votes to re-elect directors at the MCI annual meeting Monday as a protest against the company's acceptance of an $8.4 billion bid from Verizon Communications (Research), rather than a $9.7 billion offer from Qwest (Research).
The withholding of votes for the company's slate of directors is a symbolic move; without any competing slate any vote for the directors will result in their re-election. But the paper said some believe a high percentage of withheld votes will trigger Qwest to re-enter the battle. The paper said as much as 30 percent of MCI shareholders' votes could be withheld from the directors.
Qwest withdrew its bid May 2, saying the bidding process was permanently skewed against Qwest and charging that MCI management is not interested in maximizing their shareholders' value.
Since that date the paper reports Qwest and its investment bankers have been in contact with large MCI shareholders and determined they have support to vote down the Verizon deal if another offer is on the table.
One MCI shareholder who is withholding his vote for the MCI board told the paper he hopes there's enough dissent to draw Qwest back into the bidding.
"I am hoping it's a signal to Qwest that they should not have given up," said Bruce Berkowitz, the managing member of Fairholme Capital Management. "If Qwest doesn't respond [this week], it's over."
Tracking service LionShares reports that Fairholme holds about 10.7 million shares, or about 3.3 percent of shares outstanding, making it the third largest institutional investor in the telecom.
The vote on the Verizon offer is expected in late June or early July, and a simple majority is needed to approve the merger.
The paper said that the dissident large MCI investors hope that a new Qwest bid could at least force Verizon to raise its bid again, as it did at several points in the bidding process due to the competing offers from Qwest.
For stock information and recent coverage of MCI, click here.
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