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After weeks of laying the groundwork for a new buyout offer, Qwest Communications International Inc. unveiled details of its latest challenge to Verizon Communication Inc.’s $6.75 billion buyout of MCI Inc. early Thursday. The Denver-based telecom is offering nearly $8.5 billion, including a per-share offer of $10.50 in cash and $15.50 in stock. Ashburn, Va.-based MCI said that it would review the offer and respond by the close of business on March 28. Qwest’s offer detailed the synergies that it expects to reap from a combination with MCI, which had come under harsh criticism from Verizon chief Ivan Seidenberg recently. The Denver telecom expects nearly $1 billion in synergies from staff cuts and $820 million from the elimination of duplicate facilities, among other benefits. MCI executives had previously said they considered Verizon a better long-term partner, though some MCI shareholders have said the target should consider the higher offer from Qwest. Qwest had previously proposed a buyout at $24.60 cents per share, with $9.10 in cash and $15.50 in stock, for a total of about $8 billion. That topped Verizon’s deal to pay about $20.42 per share for MCI, with about $6 of the price in cash and $14.42 in stock. All together, the Verizon deal represented about $4.8 billion in stock and $1.9 billion in cash. Wednesday, Verizon chief Seidenberg delivered MCI’s board a seven page letter deriding the “desperate quality” of Qwest’s initial bid. The executive pointed to previous telecommunications deals that promised synergies that did not materialize, including WorldCom’s November 1997 acquisition of MCI and Qwest’s June 2000 buy of U.S. West. Seidenberg noted that Qwest’s $17.3 billion in debt is more than double its market capitalization. Qwest does not own wireless or yellow pages operations, he added, and has a money-losing long-distance unit. “Qwest’s claims do not pass a common sense test,” Seidenberg added. Richard Notebaert, Seidenberg’s counterpart at Qwest, responded in a filing with the Securities and Exchange Commission Wednesday afternoon that his company’s bid would create a “financially strong” entity. “Historical commentaries serve no purpose as we look to the future of the communications sector and foster competition,” Notebaert wrote. The sparring reflects just how much the telecommunications industry has changed this year. The Bells had long avoided competition between themselves, each presiding over the home regions in which they provide local phone service. In late January, San Antonio-based SBC Communications Inc. announced that it would acquire AT&T Corp., the top long-distance and business services provider, meaning that it would cross into the other Bells’ turf. Verizon and MCI announced their buyout about two weeks later, in mid-February. In the days following the transaction, Qwest executives voiced frustration that its higher offer had been spurned. On Feb. 24, the company outlined an improved offer that included protections for shareholders in case Qwest shares dropped, among other changes. Verizon had given MCI until Thursday to discuss the competing offer. If Qwest prevails, Verizon would be due a $200 million breakup fee. Copyright �2005 TDD, LLC. All rights reserved.

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