1. Discuss how changing industry conditions have encouraged consolidation within the telecommunications industry.
2. What alternative strategies could Verizon, Qwest, and MCI have pursued? Was the decision to acquire MCI the best alternative for Verizon? Explain your answer.
3. Who are the winners and losers in the Verizon–MCI merger? Be specific.
4. What takeover tactics were employed or threatened to be employed by Verizon? By Qwest? Be specific.
5. What specific takeover defenses did MCI employ?
6. How did the actions of certain shareholders affect the bidding process? Be specific.
7. In your opinion, did the MCI board act in the best interests of their shareholders? Of all their stakeholders? Be specific.
8. Do you believe that the potential severance payments that could be paid to Capellas were excessive? Explain your answer. What are the arguments for and against such severance plans for senior executives?
9. Should the antitrust regulators approve the Verizon-MCI merger? Explain your answer.
10. Verizon’s management argued that the final purchase price from the perspective of Verizon shareholders was not $8.45 billion but rather $7.05 billion. This was so, they argued, because MCI was paying the difference of $1.4 billion from their excess cash balances as a special dividend to MCI shareholders. Why is this misleading?

While many parties were interested in acquiring MCI, the major players included Verizon and Qwest. U.S.-based Qwest is an integrated communications company that provides data, multimedia, and Internet-based communication services on a national and global basis. The acquisition would ease the firm’s huge debt burden of $17.3 billion because the debt would be supported by the combined company with a much larger revenue base and give it access to new business customers and opportunities to cut costs.