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Monday, June 14, 1999

"Each problem that I solved became a rule which served afterwards to solve other problems. " -- Rene Descartes

Latest Market Numbers

Qwest Bids For US WEST & Frontier

In a bid for power in the 21st century's telecommunications market, fiber optic network operator Qwest Communications (Nasdaq: QWST) made a $55 billion cash and stock bid to acquire telecom and cable operator US WEST (NYSE: USW) and Rochester, New York-based local and long-distance phone company Frontier Corp. (NYSE: FRO).

The hostile deal sets the stage for a pitched battle between Qwest and Global Crossing (Nasdaq: GBLX), which agreed to acquire US WEST in mid-May, about two months after agreeing to buy Frontier.

In an interview with The Wall Street Journal, Qwest CEO Joseph Nacchio said he's not targeting Global Crossing, despite his bidding on two companies the up-and-coming international long-distance operation already staked its claim to.

"I wouldn't say we are going after Global Crossing," Nacchio told the Journal. "We are going after US WEST and Frontier.... Financially, our proposals are superior. Qwest is much further along in its development as a company.... That's very different than Global Crossing, which has a plan.''

Qwest's bids for the two companies -- about $80 in cash and stock for every US WEST share and $75 per Frontier share based on Friday's closing prices -- are richer than Global Crossing's $42 billion stock deal, a point Qwest made clear in a company release touting its offers. The new deal would create a significantly larger company in terms of revenues, employees, and network size, which may make it more enticing to shareholders of Qwest's targets.

Nacchio suggested in an interview with Bloomberg that his company's year-old acquisition of LCI International, a $4.4 billion deal similarly geared toward boosting its customer base to provide users for its networks, shows that Qwest can successfully integrate large acquisitions.

News to Go

Drugmaker Pfizer's (NYSE: PFE) Trovan is in further hot water, as European regulators are recommending to the European Commission that the continental licenses for the oral and intravenous formulations of the drug be suspended for 12 months. Domestic authorities have been eyeing Trovan as well, as the antibiotic has been linked to potentially fatal liver problems.

Medical device manufacturer Boston Scientific (NYSE: BSX) said it will sell 13 million shares of common stock to pay down debt incurred in connection with its acquisition of Schneider Worldwide. The new shares represent about a 3% boost to the current outstanding.

Security and related services company Borg-Warner Security Corp. (NYSE: BOR) said it plans to buy 4.35 million shares of its stock from a group of Merrill Lynch (NYSE: MER) affiliates for about $80 million, or $18 3/8 per share, today. The Merrill group also plans to sell up to 4.8 million shares of company stock in a public offering.

Real estate investment trust (REIT) Humphrey Hospitality (Nasdaq: HUMP) said it plans to buy fellow hotel REIT Supertel Hospitality (Nasdaq: SPPR) in a stock swap whereby Humphrey will exchange 1.3 shares of its stock for each Supertel stub. The deal represents a nearly 15% premium on Supertel's Friday closing price of $9 1/2 per share.

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Brian Graney (TMF Panic), Writer
Jennifer Silber (TMF Amused), Editor