|
Qwest nabs U S West
|
 |
July 18, 1999: 5:57 p.m. ET
Takes Baby Bell with $35.6B bid, leaving Frontier to Global Crossing
|
NEW YORK (CNNfn) - The battle between two upstart phone companies for U S West Inc. and Frontier Corp. ended in a compromise Sunday as Qwest Communications lured U S West with an unsolicited $35.6 billion merger offer while Frontier Corp. chose to stay with Global Crossing Ltd.
U S West said it ended its merger pact with Global Crossing, valued at about $30.7 billion, and accepted Qwest's deal, valued at $69 a share, or about $35.6 billion. Global Crossing said separately that its $11.3 billion merger agreement with local and long-distance carrier Frontier remained intact; Qwest withdrew its competing $12.4 billion bid.
Qwest, the No. 4 U.S. long-distance company, last month raised its offers to buy U S West and Frontier in a second attempt to woo them from Global Crossing (GBLX), which had reached earlier agreements to buy the two companies.
Qwest (QWST) and Global Crossing, telecom upstarts building fiber-optic communications networks, each wanted U S West (USW) and Frontier (FRO) for their local telephone connections, millions of customers and data and wireless assets.
Deals latest in hot telecom sector
The deals are the latest in the red-hot telecommunications industry as companies scramble to expand their holdings and look to offer customers new calling and high-speed Internet services.
They are also the second in the last three months where companies have decided to split assets targeted in takeover bids rather than fight a prolonged bidding war. In May, AT&T (T) struck a deal with Microsoft (MSFT) and Comcast (CMCSK) to split the assets of the No. 3 cable company, MediaOne Group (UMG).
The compromise announced Sunday gives Bermuda-based Global Crossing, which has undersea fiber-optic networks, Frontier's domestic network and a crucial foothold in the United States. Qwest, meanwhile, wins U S West's 25 million customers in 14 states from Minnesota to Washington.
Not at 'any price,' executive says
"We did not think it would not be in our shareholders' best interest to continue to increase the bid," Global Crossing Chief Executive Bob Annunziata told Reuters news agency. "I don't do anything at any price."
In ending its deal with U S West, Global Crossing said the companies negotiated a revised breakup fee of $420 million payable in cash, stock and other assets, about half of the $850 million in fees and other payments Global Crossing originally was slated to get if the deal fell apart.
The merged U S West and Qwest will keep the Qwest name and will be headed by an office of the chairman consisting of Qwest Chief Executive Joseph Nacchio, U S West Chairman Solomon Trujillo and Qwest board chairman Philip Anschutz. One of the sticking points of the merger talks between the companies was Trujillo's role in the merged company, media reports said.
The new company will have sales of about $18.5 billion next year and 14 directors, half from each company, the companies said in a statement. Qwest will pay $69 a share in stock, or a combination of cash and stock if its average stock price falls below a certain level.
The deals are subject to approval by shareholders and regulators. Qwest and U S West expect to complete their merger by mid-2000. 
-- from staff and wire reports
|
|
|
|
|
 |
|
