Acquisitions and Mergers

For all those interesting in capitalism, here's an update. Yesterday in my Acquisitions and Mergers class, we had a guest speaker... Dr. Beresford. This guy makes tons of money... he does a lot of accounting research that doesn't make sense, he teaches several classes in the J.M. Tull school of Accounting, he's on the Board of Directors for MCI/Worldcom, two other public companies, a retired partner of Ernst & Young, and owns a gazillion shares in his companies plus God knows what.
He gave us a talk on what life is like as a Board of Director (Ryan, Board of Directors are guys who are elected by shareholders. Their job is to hire and fire the company managers, and to oversee anything that deals with the public, i.e. Dividend Declarations, Bond issuance, and now recently because of Enron- overseeing audits of the financial statements. )
Anyways, it was very timely that Dr. Beresford came to talk to us. As you can read from Fox News , MCI/Worldcom is in the middle of an acquisitions battle between Qwest (a shitty communications company out west) and Verizon (a vibrant communications company based out of the Northeast.) where MCI is to be the acquired company. Dr. Beresford gave us the inside scope on this transaction at 3:00 yesterday, 3 hours before his conference call that would decide the fate of who the acquiring company would be... Qwest or Verizon.
I thought it was interesting how these negotiations were taking place. Qwest, in the past 2 months of the negotiations, had formally contacted MCI's board of directors only once through the whole process, while Verizon stayed in personal contact with all those at MCI on a daily basis. Qwest decided not to negotiate formally, but rather to use the press as the mediator. Qwest used means reminiscent of a 4th grader, using name calling and threats behind the teacher's back to bully it's way to the table. The only time that Dr. Beresford heard from Qwest's CEO was a week ago. After a 20 minute conference call with the CEO, where all the other Board of Directors also participated, they spent another hour by themselves trying to decipher what the CEO was trying to say. They decided that the CEO of Qwest was retarded.
On top of this preocrial style of business, Qwest desires to buy out MCI for a price that is two times more than their own net worth (Ryan, that does not make sense.) Verizon's purchase price represents only a fraction of their own net worth. Qwest's CEO also told Dr. Beresford and others that the regulatory process would be much faster by taking their bid. That produced hysterical laughs from MCI's Board of Directors... there's nothing legally different between being acquired by Qwest or Verizon. Needless to say, MCI has chosen Verizon's bid for the acquisition. After MCI's accounting scandal a couple of years back (where 100 billion dollars of financial misstatements where discovered), they were not about to take a chance with a company that sounds like a retarded step child.
I thought some of you might think that was interesting of how these multi billion dollar transactions take place. It's not much different than kids trading candy at recess.