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CenturyLink confirmed that it is going to acquire Level 3 Communications for $34 billion, creating what will be the second largest domestic provider and posing a greater threat to AT&T and Verizon in targeting global enterprise customers.
Under terms of the agreement, Level 3 shareholders will receive $26.50 per share in cash and a fixed exchange ratio of 1.4286 shares of CenturyLink stock for each Level 3 share they own. This implies a purchase price of $66.50 per Level 3 share (based on a CenturyLink $28.00 per share reference price) and a premium of approximately 42 percent based on Level 3's unaffected closing share price of $46.92 on October 26, 2016, the last trading day prior to market speculation about a potential transaction.
After closing the deal following regulatory approvals, CenturyLink shareholders will own approximately 51 percent and Level 3 shareholders will own approximately 49 percent of the combined company.
Leading the company will be Glen Post, who will continue to serve as CEO, while Level 3’s Sunit Patel will stay on as CFO. At the time the acquisition closes, the current Chairman of CenturyLink's Board will continue to serve as Chairman of the combined company. CenturyLink has agreed to appoint four Level 3 Board members at closing, one of whom will be a representative of STT Crossing, a...