An MCI Inc. shareholder has sued to block the company’s $6.8 billion takeover by Verizon Communications Inc., saying the price was too low, according to a published report Sunday.
The lawsuit, which was filed on Friday, said MCI and its board of directors breached their fiduciary duties “by depriving MCI’s public stockholders of maximum value to which they are entitled,” Reuters reported.
The lawsuit claimed that the amount Verizon would pay is “unconscionable, unfair and grossly inadequate” compared with the “intrinsic value” of MCI’s common stock and future growth prospects, as well as the scarcity value of the company’s assets in the quickly consolidating communications industry, according to Reuters, which obtained a copy of the suit.
The suit seeks class-action status on behalf of MCI shareholders, Reuters noted.
MCI, the No. 2 long-distance carrier, on Monday chose to accept a takeover offer from New York-based Verizon that was more than $1 billion less than a bid from Qwest, which valued MCI at $24.60 a share.
The lawsuit said shareholders representing 11 percent of MCI’s stock have stated that the company’s board should reconsider Qwest’s bid, Reuters reported. The filing did not name those shareholders.
The lawsuit, filed by Joseph Pojanowski in the Delaware Chancery Court, reportedly seeks to prevent the Verizon-MCI deal under current terms. Pojanowski did not disclose how many shares of MCI he owned, according to Reuters.
The suit also reportedly asks the company’s board to create an auction and hold serious negotiations with any bona fide bidder.