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April 22, 2010 12:17 PM

Four Firms Busy on $10.6 Billion Qwest-CenturyTel Merger

Posted by Julie Triedman

Qwest Communications agreed Thursday to be acquired by CenturyTel Inc. in a $10.6 billion all-stock deal. Including the assumption of $11.8 billion in Qwest debt, the deal reflects an enterprise value of $22.4 billion, according to a statement from CenturyTel announcing the deal. It's the largest telecom deal since mid-2008, when Verizon Wireless purchased Alltel for $28.1 billion.

For several years, Qwest, a remnant of the regional "Baby Bell" companies, has been looking for ways to build a more competitive business as AT&T Inc. and Verizon Communications Inc. have lured customers away from landline operators, according to Reuters. In 2005, for instance, it lodged an unsuccessful bid for MCI. A combined CenturyTel-Qwest will offer broadband products and landline services in local markets in 37 states. 

Once the deal closes, CenturyTel will hold 50.5 percent of stock in the combined company to Qwest's 49.5 percent. The price per Qwest share, $6.02, reflects a 15 percent premium over Qwest's closing stock price Wednesday. The two companies say they expect eventually to achieve annual cost savings of $575 million through synergies.

Qwest turned to teams from Skadden, Arps, Slate, Meagher & Flom and Wilmer Cutler Pickering Hale & Dorr to advise on the deal; in-house, Qwest relied on James Zerefos, vice president-legal, and Helen McClure, associate general counsel. 

The Skadden team led the M&A front, with partner Charles Mulaney, Jr., leading the transactional work alongside Susan Hassan. Mulaney has advised Qwest on corporate and transactional matters for about six years, including on Qwest's unsuccessful bid for MCI in 2005, Qwest chief administrative officer and general counsel Richard Baer says. The Skadden team also includes tax partner Louis Freeman and executive compensation and benefits partner Joseph Yaffe.

Wilmer, which is providing antitrust and regulatory advice, also is a longtime counsel to the company on a variety of matters, Baer says. James Lowe led the antitrust team, assisted by William Kolasky and counsel Jeffrey Ayer and Reudiger Schuett. Lynn Charytan and Samir Jain led the federal regulatory team, assisted by Jonathan Nuechterlein and counsel Heather Zachary.

CenturyTel is represented on the deal by Wachtell, Lipton, Rosen & Katz and New Orleans firm Jones Walker. Eric Robinson led the Wachtell team alongside David Shapiro; he was assisted by Jodi Schwartz for tax advice, Michael Segal for employee benefits, Ilene Gotts for antitrust counsel, and Eric Rosof for financing issues.

Kenneth Najder led the Jones Walker team; he was assisted on finance matters by Marshall Page III and special counsel Christopher Wappel, and on benefits matters by John Blackman IV and Timothy Brechtel; associate William Bishop assisted on corporate matters. Both firms worked on CenturyTel's last major transaction, the $5.8 billion acquisition of Embarq Corporation (The Am Law Daily reported on the deal in October 2008).

Simpson Thacher & Bartlett is representing J.P. Morgan Securities Inc. as financial adviser to CenturyTel in the transaction; the two partners involved there are Gary Horowitz and Robert Spatt.

The new company, whose name has not been officially announced, will be based in CenturyTel's home base of Monroe, Louisiana.


Contact Julie Triedman at jtriedman@alm.com.


RELATED STORIES FROM THE WEB

Could There be Gold for CenturyTel in Them Thar' Landlines? Reuters

Landline Operators Qwest, CenturyTel to Merge Wall Street Journal

CenturyTel to Buy Qwest for $10.6B PC World


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