MOUNT VERNON — A merger between Embarq and CenturyTel has been approved by the boards of directors of both companies.
The agreement approves a deal where CenturyTel will acquire Embarq in a tax-free stock-for-stock transaction. This will create one company — the name as yet undecided — and it will be one of the largest communications companies in the United States.
The combined company will operate in 33 states. It will have approximately 8 million access lines, 2 million broadband customers and 97,000 miles of fiber optic lines.
“The deal is expected to be finalized by next June,” said local Embarq Public Affairs Manager Jim Kelly. “This will depend on getting all the approvals necessary. It hasn’t been determined if we will be called CenturyTel, Embarq or a new name.”
The transaction is subject to regulatory approvals, according to the Embarq press release covering the deal. The approvals include the expiration or termination of the applicable waiting period set by the Hart-Scott-Rodina Antitrust Improvements Act; approvals from the Federal Communications Commission, public service commissions of certain states and other customary closing conditions. Finally, the deal is subject to the approval of the shareholders of the two companies.
The new company will be run by a combination of high level executives from both companies. Glen Post, CenturyTel’s chairman and chief executive officer will be the new company’s CEO; Tom Gerke, Embarq’s CEO will become executive vice chairman of the board.
Any future effects on the local office are uncertain at this time. However, according to Kelly, there has been a reduction in the service and engineering departments done through early retirement program incentives.
Under the terms of the agreement, Embarq shareholders will receive 1.37 CenturyTel shares for each share of Embarq common stock they own. Based on the closing stock price for CenturyTel on Oct. 24, this consideration would be equivalent to $40.42 of CenturyTel stock for each Embarq share, representing a premium to Embarq shareholders of approximately 36 percent over Embarq’s closing stock price on Oct. 24, and 11 percent over Embarq’s average closing stock price during the past 30 calendar days.
CenturyTel has received commitments from Bank of America, Barclays Bank PLC, Morgan Stanley Senior Funding Inc. and SunTrust Robinson Humphrey to refinance Embarq’s bank debt at closing.
CenturyTel is a provider of communications, high-speed Internet and entertainment services in small- to mid-size cities using broadband and fiber transport networks.
Embarq — formerly Sprint — provides local and long distance home phone service, high-speed Internet, wireless, and satellite TV from DISH Network.
