CenturyLink and Level 3 to merge in $34bn deal
31 October 2016 | James Pearce
CenturyLink will merge with Level 3 Communications in an acquisition announced today (31 October) worth around $34bn.
The cash and stock agreement will see CenturyLink expand its fibre network and high speed data services, with the combined firm offering connections in more than 350 metropolitan areas with more than 75,000 on-net buildings.
It adds 200,000 route miles of fibre to CenturyLink’s reach, with 64,000 in metropolitan areas and 33,000 of subsea routes across several continents.
The combined company will have revenues of around $19 billion, 76% of which is derived from business customers. The deal is expected to see annual synergies of $975 million.
CenturyLink CEO Glen Post will continue to serve as president and CEO of the new company when the deal closes. It is expected to be confirmed in the third quarter of 2017.
“The digital economy relies on broadband connectivity, and together with Level 3 we will have one of the most robust fibre network and high-speed data services companies in the world,” Post said. “This transaction furthers our commitment to providing our customers with the network to improve their lives and strengthen their businesses.
“It is this focus on providing firer connectivity that will continue to distinguish CenturyLink from our competitors. CenturyLink shareholders will benefit from the significant synergies and financial flexibility provided by the combined company’s revenue growth and strong cash flow. For employees, this combination will bring together two highly customer-focused organizations and provide employees growth and advancement opportunities the companies could not offer separately.”
The deal will see CenturyLink shareholders own 51% of the combined company, while Level 3’s shareholders will hold approximately 49%. Four board members from the latter will sit on the board, as part of the agreement.
Both companies have a history of making acquisitions. In 2011, Level 3 bought Global Crossing for around $2 billion, while in it 2014, it snapped up TW Telecom for roughly $6 billion.
CenturyLink made two acquisitions in 2011, buying Qwest Communications for $11 billion and Savvis for $2 billion. In 2009, it bought Embarq Corp for around $6 billion.
“This is a compelling transaction for our customers, shareholders and employees,” said Jeff Storey, president and CEO of Level 3. “In addition to the substantial value delivered to shareholders, the combined company will be uniquely positioned to meet the evolving and global needs of enterprise customers.”
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