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Qwest says talks continue
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March 8, 2000: 12:23 p.m. ET
But shares dip on report that Deutsche Telekom is leery of U S West-Qwest deal
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NEW YORK (CNNfn) - Qwest Communications International Inc. shares tumbled as much as 11 percent Wednesday morning after a report said Deutsche Telekom AG has shelved talks on buying the No. 4 U.S. long-distance carrier. Qwest, however, said the report was "inaccurate."
Shortly before noon ET Wednesday, shares of Denver-based Qwest (Q: Research, Estimates) fell 3-1/8 to 52-7/8, after falling as low as 50.
The New York Times reported Wednesday Deutsche Telekom, Europe's leading telecommunications carrier with a market value of more than $300 billion, essentially had walked away from talks to buy Qwest because it isn't likely to wrest Qwest from its merger partner U S West Inc., the regional Bell operator in the northwest United States.
Qwest spokesman Tyler Gronbach said the Times report "probably" had an effect on the stock price. "What I'm telling you is that the story is inaccurate. We are still in negotiations with a major telecommunications company," Gronbach said, referring to a Qwest statement Sunday that the company had been in talks with an unidentified suitor, reported to be Deutsche Telekom.
"As we said Sunday, [Qwest] plans to announce when those talks have concluded and/or when a definitive agreement has been reached," he added.
Qwest also said then it has no desire to enter a deal unless U S West was brought into the fold as well.
However, one person familiar with the negotiations told CNNfn: "It looks like that's the way things are headed."
The Times, quoting executives close to the talks, also reported there is a small possibility talks could revive in the future. The newspaper said those executives believed Deutsche Telekom would revive discussions about a buyout of Bermuda-based Global Crossing Inc. (GBLX: Research, Estimates), which operates undersea cables.
That came in the wake of widespread reports last week that Telekom had stepped up talks to buy Qwest stock for at least $70 per share and that U S West wasn't immediately made aware of the talks. Qwest Chairman and CEO Joseph Nacchio was quoted in those reports that any deal is breakable, leading some to suggest he was looking for an exit from the U S West deal.
But one analyst said the report was just one of several factors weighing on Qwest's stock of late, including recent market repositioning by arbitrageurs, who make bets on the likelihood of a deal getting done, and general softness in the market.
"The stock [had run] up because the arbitrageurs were getting killed. Now we're back at the starting point" William Klein, an analyst with Wasserstein Perella Securities, said. "The market and the story have something to do with it. Essentially, investors who have been in this stock are back where they were prior to these rumors."
"If [Deutsche Telekom] comes along and knocks at the door, of course you are going to open it," said Klein.
While saying Qwest is likely to be part of a bigger company eventually, Klein said the time isn't right for Qwest to strike a new deal, and he said Deutsche Telekom isn't likely to be the winning bidder anyway.
Shareholders of Qwest and U S West already have approved the $36 billion merger, which was struck last July and is expected to close by the middle of the year. State governments and the Federal Communications Commission also are reviewing the deal's impact on consumers.
U S West (USW: Research, Estimates), also of Denver, rose 2-7/8 to 71, while the American depositary receipts of Deutsche Telekom (DT: Research, Estimates) fell 2-11/16 to 92-1/2. 
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