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October 27, 2008 1:25 PM

Wachtell and Cravath Help Telecom Firms Get Connected

Posted by Rachel Breitman

With weakened credit options failing to slow the telecom industry's rapid consolidation, telephone and Internet service provider Century Tel, Inc. said Monday that it would buy its competitor Embarq  Corporation, the nation’s fourth largest local exchange carrier, in a $5.8 billion stock deal.

Wachtell, Lipton, Rosen & Katz, which has managed to stay on top of the merger market despite the credit crisis, represented CenturyTel. Corporate partners Eric Robinson and David Shapiro got help from antitrust partners Ilene Gotts, executive compensation partner Michael Segal, and restructuring partner Eric Rosof. Cravath, Swaine & Moore advised Embarq, with corporate partners Robert Townsend and George Schoen at the helm, aided by executive compensation partner Eric Hilfers and tax partner Lauren Angelilli.

Embarq, which spun off from Sprint amid the latter's 2006 merger with Nextel, has been on the block since September. In the last five weeks, the Overland Park, Kansas, firm's stock price has fallen by more than a third, from $46 to a low of $29 Friday. Monroe, Louisiana-based CenturyTel will exchange close to 1.36 of its shares for each of Embarq’s, for a price of close to $40 a share. The deal, including the assumption of $5.8 billion of the Embarq debt, totals $11.6 billion. CenturyTel's CEO Glen Post III will lead the combined company.

"In addition to bringing together the complementary assets, geographic coverage and outstanding employees of both companies, this combination unites two very similar corporate cultures," Post said in a statement.

As the telecom sector consolidates, competition has forced CenturyTel to stay active in the M&A market. The company, which has previously acquired stakes in SkyComm International Inc., Digital Teleport, Inc. and Midwest Fiber Optic Network, has focused its expansion efforts in the wireless-voice and data-service markets due to the declining popularity of land line telephones.

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