Wednesday, June 23, 1999 Published at 20:23 GMT 21:23 UK
Business: The Company File
Qwest raises telecoms stakes
The merger war in the US telecoms industry is heating up, with Qwest improving its offer to buy rival telecom firms US West and Frontier.
Qwest is the fourth largest long-distance carrier in the US, but its original bids were meet with little enthusiasm by the take-over targets. Both companies have already agreed to merge with the new and upcoming telecoms firm Global Crossing.
US West is a large regional phone company with 25 million customers, and would give Qwest direct access to a large subscriber base.
The financial markets do not seem to like Qwest's plans either.
Since last week, when Qwest first announced its take-over plans, the company's shares have slipped about 30%.
When the new bids were announced on Thursday, Qwest's stock price slid another 8%.
All this is making Qwest's offers not very much attractive.
In its original bid, the company had tried to buy US West in exchange for shares in the combined company. To make up for lost value, Qwest has increased its offer, taking it to $69 per share, or $35bn for the whole company.
The original Frontier bid included a cash element, but his has now been dramatically increased. Instead of $20 per share plus some stock, Qwest is now offering $68 plus some of the combined company's shares.
Qwest chairman Joseph Nacchio said he had revised the offers "in order to be fully responsive to the issues raised by ... US West and Frontier".
He said the new bids were clearly "superior" to the offer made by rival Global Crossing.
When Frontier and US West decided not to take up Qwest's original offers, they pointed to the hefty swings in the company's stock price.
Global Crossing committment
The new bids include "collars" - protection against a decline in Qwest's stock price.
Shares in US West and Frontier, meanwhile, continue to rise as investors hope that the bidding war will allow them to make windfall profit.
If the companies decide to opt for Qwest, rival Global Crossing will have five days to respond.
Bermuda-based Global Crossing said it had no plans to take any action at this time, but reaffirmed its commitment to merge with US West and Frontier.
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