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CenturyLink to acquire Qwest for $10bn
22 April 2010
Glen Post’s CenturyLink, created from a merger of CenturyTel and Embarq, is to take over Qwest in a $10bn deal
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Two of the last remaining independent operators in the US, CenturyLink and Qwest, are to merge in a deal valued at $10.6 billion. The boards of both companies have agreed the deal, but it is subject to shareholder approval and permission by regulators.
CenturyLink itself is a product of a recent merger — of Embarq, the demerged fixed-line arm of Sprint, and CenturyTel, completed in July 2009 as a tax free, stock-for-stock transaction. That created a company with 2.1 million broadband customers, more than 440,000 video subscribers and about 7.5 million access lines in 33 states.
The latest deal will create a group with 5 million broadband customers, 1,415,000 video subscribers, 17 million access lines and 850,000 wireless consumers.
CenturyLink CEO Glen Post said: “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.”
Under the new agreement, CenturyLink shareholders are expected to own 50.5% and Qwest shareholders 49.5% of the combined company.
The companies say that the deal is expected to generate annual operating and capital synergies of $625 million over a three- to five-year period following the close of the transaction.
Qwest is the relic of the last independent “Baby Bell”, the former US West which was taken over by long-distance company Qwest in 2000. US West was headed by Sol Trujillo — later CEO of Orange and then Telstra — but was replaced by Qwest CEO Joe Nacchio, who has been in prison since 2009 for insider trading while running the company.
Edward Mueller, the current CEO of Qwest, said: “We are pleased with the progress we have made and believe that the combined company will be well positioned to win in an increasingly competitive marketplace.” GTB