NEW YORK (AP) – MCI embraced a $9.75 billion takeover bid from Qwest on Saturday, finally succumbing to pressure to scrap its lower-priced deal with Verizon.

Verizon Communications Inc. now has five business days to respond with an improved proposal or possibly walk away the loser after a nearly three-month bidding war.

MCI Inc. said its board of directors, after shunning three prior bids from Qwest Communications Inc., had determined that the latest offer was superior to the long-distance phone company’s $7.5 billion agreement with Verizon. Verizon’s options include boosting its offer a second time or walking away with a sizable breakup fee.

Alternatively, the New York-based phone company could have MCI shareholders vote on the current deal, hoping that enough are fearful of Qwest’s shaky finances and strategic outlook.

Verizon and Qwest have been battling for MCI since late January, when their mutual rival SBC Communications Inc. reached a deal to acquire long-distance carrier AT&T Corp. for $16 billion.

Based in Ashburn, Va., MCI has been hit hard by competition and a bankruptcy brought on by the WorldCom scandal, but still possesses a valuable customer base and national fiber-optic network.

Although AT&T is in far better financial health than MCI, the bidding has placed a much higher relative valuation on MCI.

Verizon, one of the nation’s two biggest local and wireless phone companies, said in a statement Saturday it would consider all its options. It questioned whether Qwest’s higher offer would be “sufficient compensation for the increased risks associated with completing the transaction and executing the business plan.”

Qwest, the local phone company in 14 mostly western states, is burdened by a high debt load. It issued a statement Saturday saying it was “gratified” by the news from MCI.

However, Denver-based Qwest also sounded a note of distrust after being treated as a second-class suitor for so long, its prior offers used chiefly a lever for extracting more money from Verizon.

“We expect MCI to build upon its declaration of superiority with specific acts of support, including expeditiously seeking regulatory approvals of a transaction that it considers superior and in the best interests of its shareowners,” the statement said.

Should Verizon choose to pay more, it wouldn’t necessarily need to match the $30 a share which Qwest offered Thursday.

MCI’s board has twice accepted lower-priced deals with Verizon, so that Verizon could prevail again with a lower bid. The current Verizon deal, for example, values MCI at $23.10 per share, or $4.40 less than Qwest’s previous offer of $27.50.

The MCI statement, which came several hours before a deadline set by Qwest in submitting its new offer on Thursday, said Qwest’s proposal gives the board until May 3 to change its recommendation away from Verizon.

Several major MCI shareholders agreed to help finance the latest Qwest bid, a move that intensified pressure on MCI’s board of directors to switch merger partners.

Still, MCI directors have repeatedly expressed concern about Qwest’s $17 billion debt load and the long-term value of the Qwest shares MCI investors would receive as partial payment. The MCI board also has questioned whether Qwest can meet its forecast of nearly $3 billion a year in cost savings from the proposed merger.

Qwest’s $30-per-share offer consists of $14 in Qwest stock and $16 in cash – an increase of $2.50 in cash compared with its prior offer.

The Verizon deal valued MCI at $23.10 per share, though two weeks ago it agreed to pay nearly $26 a share for a 13.4 percent stake in MCI from Mexican billionaire Carlos Slim Helu. That gambit fueled speculation that Verizon would offer at least that much for the rest of MCI’s stock.

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On the Net:

http://www.verizon.com

http://www.mci.com

http://www.qwest.com