Verizon attempts to outflank Qwest

In the fight between Verizon Communications and Qwest Communications to take over MCI, Verizon has taken what is probably a commanding advantage over Qwest by making a deal over the weekend to buy out MCI’s largest shareholder’s 13 percent share of the company.

Verizon, the largest U.S. telecommunications company, agreed to pay Carlos Slim $1.1 billion for his 43.4 million shares of MCI.

Despite Verizon’s move, Qwest has still not given up in its bid to buy MCI. Qwest executives met with bankers on Sunday to consider their next move. Qwest had worked out a deal to raise additional equity to support their bid from a group of MCI shareholders who oppose Verizon’s bid.

But with the Verizon acquisition of Mr. Slim’s shares, which makes Verizon MCI’s largest shareholder, it is doubtful whether Qwest can count on enough of MCI’s shareholders to overcome Verizon’s bid.

Mr. Slim was one of those who opposed Verizon’s bid. MCI’s board of directors has repeatedly turned down Qwest’s bids, saying that Verizon is a financially superior company and that the Verizon bid is favored by MCI’s customers.