Did Qwest Stock Rise Too Fast For A Buyout?

The Stalwart submits: Don't let your stock rise too much... otherwise private equity firms might not be interested in buying you out. That seems to be the lesson here.

In August 2002, shares of Qwest Communications International (Q) were trading around $1.24 a share, and the entire company – which sells phone and Internet service across the Midwest and Rockies – was valued at just $2.6 billion. Monday, the company’s stock is trading at $10.16 a share, for a total market cap of $18.8 billion, a 719% increase.

So hurrah for Notebaert.

Or, um, not. Why not?

While Qwest’s name has come up repeatedly at Wall Street banks, investment bankers all shake their heads in amazement. The company’s simply too richly valued for a buyout right now, they say.

Which begs the question: Did Notebaert do badly for his shareholders by doing too well in restoring the company? Might a lesser-valued company actually capture more value by becoming LBO bait?