I surrender: An MCI post

OK, I give up. No, I haven't been drinking French wine or eating French cheese. Out of sheer contrariness, I'd been steadfastly refusing to write about the war that's currently raging over the hearts and minds of MCI's directors and shareholders. And sure enough, it looked the the story was over when MCI agreed to accept Verizon's offer instead of a higher bid from Qwest.

But never fear, the saga isn't over yet. Qwest may not be quite ready to give up the ghost (so says AP, via Forbes.com).

If you haven't followed it closely, this story may seem rather odd. Qwest has consisently been making better offers to MCI's shareholders. So why are they willing to go to Verizon? Because even if, over the short term, Verizon's offers have been less appealing, over the long term the Bell grandkid offers the best shot for MCI. Its balance sheet is much healthier than Qwest's. It is already a major player in the wireless market (remember, MCI's efforts to emerge from the WorldCom fiasco have been hampered by the fact that it doesn't offer a wireless product in a marketplace where free national calling plans on cell phones are significantly eroding the business of traditional MCI-esque long distance companies). And, whereas Qwest's major national presence is a fiber-optic network that is already under fierce competitive pressure, Verizon doesn't have quite the same type of problem.

Which all matters to MCI shareholders because any deal is going to involve them receiving stock in the acquiring company. That stock is much more likely to be worth something down the road if it's Verizon stock instead of Qwest's. Thus, it is possible for what looks like an inferior offer on paper at this moment to be a better deal in the long term.

If I owned MCI stock, I would be hoping for the Verizon deal to go through. But then, I don't own MCI stock. So I will just happily continue to speculate with other people's money.