Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

CenturyTel, Qwest in $10.6 billion merger

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- In one of the largest telecommunication mergers in years, CenturyTel Inc. announced Thursday it will acquire Qwest Communications in a $10.6 billion all-stock transaction.

The combined companies will have operations in 37 states providing land line, broadband and video services on a 173,000-mile fiber network, the companies said.

Under the terms of the deal, Qwest shareholders will receive 0.1664 CenturyTel shares for each share of Qwest common stock they own. Based on Wednesday's closing price, Qwest shareholders will get the equivalent to $6.02 per share of CenturyTel stock, a 15% premium.

Including $11.8 billion of Qwest debt, the merger has an enterprise value of $22.4 billion, the companies said. The deal is expected to result in $625 million of cost savings.

"This combination will enhance our ability to deploy innovative IP products and high-bandwidth services to business customers, expand broadband availability and speed to consumers, and offer superior, differentiated video products," Glen Post III, CenturyTel's chief executive officer, said in a statement.

The merger comes as both companies struggle to compete with larger telecom companies such as AT&T (T, Fortune 500) and Verizon (VZ, Fortune 500).

In addition to 5 million broadband customers, the companies boast a combined 17 million access lines, 1.4 million video subscribers and 850,000 wireless users.

"We look forward to becoming part of a larger company with a strong financial profile," Edward Mueller, Qwest's chief executive officer, said in a statement.

When the deal closes, CenturyTel (CTL) shareholders are expected to own about 50.5% of the company, while Qwest (Q, Fortune 500) shareholders will control about 49.5%. To top of page

Index Last Change % Change
Dow 15,973.84 313.66 2.00%
Nasdaq 4,337.51 70.67 1.66%
S&P 500 1,864.78 35.70 1.95%
Treasuries 1.75 0.10 6.33%
Data as of 3:07pm ET
Company Price Change % Change
Bank of America Corp... 11.95 0.79 7.08%
General Electric Co 28.26 0.81 2.95%
Cisco Systems Inc 25.11 0.43 1.74%
Chesapeake Energy Co... 1.59 -0.19 -10.67%
Freeport-McMoRan Inc... 5.53 0.64 13.09%
Data as of Feb 12
Sponsors

Sections

Investors need someone they can bring home to mother instead of bad boys (or girls) that may make their heart beat faster. Boring beats bold in this market. Here are 10 dependable stocks we love. Southwest (ticker symbol: LUV) is one. More

Cheap oil and slow global growth may not be the only culprits of the global market turmoil. There's growing concern that central banks are spooking the markets too. More

Eastern Illinois University laid off 198 staff members this week, and the college president is blaming the state government. More