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Alltel wants CenturyTel
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August 14, 2001: 7:19 p.m. ET
Rural telecom company makes unsolicited $6.1B bid for CenturyTel
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NEW YORK (CNNfn) - Rural telecommunications company Alltel Corp. launched a $6.1 billion unsolicited bid including debt for CenturyTel Inc. late Tuesday, after its attempts to merge with the company were rebuffed by the CenturyTel board.
Alltel (AT: Research, Estimates) said its proposal offers CenturyTel shareholders the choice of either $43 in cash or 0.6934 of a share of Alltel, about a 40 percent premium over CenturyTel's Tuesday's closing price of $30.62.
That would bring the price tag for CenturyTel to $6.1 billion. Alltel would also assume $3 billion in debt, bringing the total value of the transaction to $9.1 billion. The deal would be pro-rated to 50 percent cash and 50 percent stock, the company said.
The news sent CenturyTel shares soaring in after-hours trade. The stock rose $8.88, about 29 percent, to $39.50 on Instinet.
In a statement issued late Tuesday CenturyTel said it will not consider the proposal, which it said is identical to one previously submitted.
"CentruyTel's board had unanimously rejected the previous proposal after full consideration and after receiving advice from J.P. Morgan and Wachtell, Lipton, Rosen & Katz, its financial and legal advisors," CenturyTel said.
The company added there is no reason for future consideration, as the board has decided the company is not for sale.
Alltel said the proposed merger would "create a rural communications powerhouse" with about 7.2 million wireless customers and 4.4 million wireline customers. It said combined revenue would be about $10 billion.
Alltel President and COO Scott T. Ford told CNNfn's N.E.W. Show such a combination would create a company that is very profitable and very defensible for a very long time. (257K WAV or 257K AIFF)
"We continue to push forward because it's a compelling value proposition for CenturyTel shareholders and we think long-term for ours as well," Ford said.
In a letter to CenturyTel Vice Chairman, President and CEO Glen F. Post III, Ford wrote that the CenturyTel board passed on the merger because the company intends to separate its wireless and wireline businesses.
Ford added a merger "would allow CenturyTel to avoid the significant risks and potential tax inefficiencies" of separating the businesses.
He said he could not comment on whether Alltel will go directly to shareholders if CenturyTel refuses to cooperate, but noted CenturyTel has a different class of stock related to voting which may complicate such a move. 
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Alltel
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