Newspaper article THE JOURNAL RECORD

Qwest's Shares Sink 25 Percent Drop Shaves $13.6 Billion off Its Offer for U S West and Frontier

Newspaper article THE JOURNAL RECORD

Qwest's Shares Sink 25 Percent Drop Shaves $13.6 Billion off Its Offer for U S West and Frontier

Article excerpt

NEW YORK (AP) -- The audacious takeover bid by upstart telecommunications company Qwest Communication International for U S West and Frontier suffered a setback Monday at the hands of a skeptical Wall Street.

As Qwest stock got pummeled, the value of its offer for the two phone companies sank 25 percent, dimming the company's chances for busting the merger agreements both U S West and Frontier already have with Global Crossing. By the end of the day, Qwest's bid had shrunk to $41.5 billion from the $55 billion announced Sunday, leaving it just below the $43.9 billion bid by Global Crossing.

Both Qwest and Global Crossing are building worldwide fiber- optic cable networks to bring consumers and businesses a host of services, including movies, television, radio, e-mail and Internet access. But it's expensive, and both company's need customers. That's why they are going after U S West, a Denver based Baby Bell with local phone service in 14 states, and Frontier, the nation's No. 5 long- distance phone company based in Rochester, N.Y. The potential bidding war between Qwest and Global Crossing would pit two rising stars in the telecommunications industry against each other: Joseph P. Nacchio, chairman and chief executive of Qwest, and Robert Annunziata, chief executive officer of Global Crossing. "Nacchio and Annunziata have staked their reputations on building their companies into leadership positions," said Jeffrey Kagan, an independent telecom analyst. Investors, however, apparently are concerned about the price Nacchio has offered and the promised benefits of the deal. In addition, U S West and Frontier have $11.4 billion in combined debt that Qwest would have to carry if it succeeds. Qwest's stock closed down $10.75 at $34.12 1/2 Monday on the Nasdaq Stock Market. Global Crossing's shares, which had dropped 16 percent since it made its bid last month, dipped 37 1/2 cents to $50. …

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