NEW YORK -- Telecommunications upstart Qwest appears to have lost the first round in its bid to buy Frontier Corp. out from under Global Crossing Ltd.
Frontier Corp., a small long-distance telephone company, said Thursday it would take no action on the $11.3 billion unsolicited takeover offer from Qwest Communications International Inc. and would proceed with its plans to merge with Global Crossing."The current circumstances surrounding the Qwest proposal do not warrant any change at this time in our current initiatives that are designed to move Frontier's transaction with Global Crossing toward a prompt closing," Joseph P. Clayton, Frontier's chief executive officer, said in a statement.
That leaves Qwest with at least three options: sweeten its bid, take the offer directly to Frontier's shareholders or walk away.
A spokesman for Qwest said the company has no plans to raise the stakes but expressed hope Frontier might be swayed.
"We are comfortable with our bid and we are positive that as Frontier continues to review our proposal they will find it superior" to Global Crossing's, he said.
Qwest, based in Denver, is the No. 4 long-distance phone company but has grand visions of becoming a global provider of high-speed Internet communications.
The company made its bold offer to Frontier on Sunday along with a companion $32.3 billion bid to acquire US WEST Inc., a Denver-based Baby Bell telephone company. Both US WEST and Frontier, based in Rochester, N.Y., have agreed to combine their operations with Global Crossing, a nascent communications company that is building a vast undersea cable network for Internet traffic.
Qwest's takeover offers, which consist mostly of Qwest stock, quickly lost much of their appeal Monday as skeptical investors bailed out, sending Qwest's shares down 24 percent. The stock has since recovered slightly, but only enough to make the combined bid of $43.6 billion neck-and-neck with the $43.9 billion offer from Global Crossing.
Robert Annunziata, Global Crossing's chief executive officer, took Frontier's inaction as a sign of victory.
"We're pleased that the Frontier board of directors has reaffirmed its commitment to complete the merger with Global Crossing as planned," he said in a statement.
US WEST spokesman David Banks Friday said the company had no comment on Frontier's statement, and would continue to evaluate the offer from Qwest.
Investors signaled Friday they liked the turn of events, bidding up shares of all of the companies involved.
Frontier's shares rose about 13 cents to $57.88 in midmorning trading on the New York Stock Exchange, where US WEST's shares were up 6 cents at $57.
Qwest's shares jumped $1.38 to $37.38 on the NASDAQ Stock Market, where Global Crossing's stock was $1.56 higher at $50.378.