On 31st October, within 10 days of the mega- merger announcement by AT&T and Time Warner Inc, CenturyLink announced its decision to buy Level 3 Communications in a massive $34 billion cash-and-stock deal. The equity value of the deal, excluding debt, is about $24 billion. CenturyLink, offered $26.50 in cash and 1.4286 of its shares for each Level 3 share, there by valuing Level 3 at $66.50 a share. Post the acquisition, CenturyLink shareholders will own about 51% of the combined company.
CenturyLink, services 6 million residential Internet customers, mainly in rural areas and Level 3 operates mainly in cities on the East and West Coasts. Both companies have been facing immense competition from larger rivals and through this merger, believe that they can consolidate and stand up to the might of AT&T and Verizon. CenturyLink and Level 3 is expecting the combined company to save over $900 million in cost-cutting synergies, according to the press release announcing the deal.