CenturyTel May Sell Wireless Division
CenturyTel Inc. said Wednesday it might sell its wireless business and focus on building its rural local telephone operations, even as it fends off a $5.81-billion unsolicited takeover offer from rival Alltel Corp.
Alltel did not disclose its next move after CenturyTel rejected its overtures for a third time, but its stock dropped nearly 7% to close off $4.16 at $56.90 amid investors’ concerns that it would have to raise its offer. Shares of CenturyTel closed up $4.09, or about 13.4%, to $34.71 on the New York Stock Exchange.
“At this juncture, for all the obvious reasons, we don’t have any comment on what is possible or what is likely in terms of our future actions on this,” Joe Ford, chairman and chief executive of Alltel, said in a conference call with analysts.
Alltel said it made its bid after it learned that CenturyTel was considering separating its wireless and land-line units. In an acquisition, Alltel would keep the two businesses together so it could sell packages of services to customers, and would use the money generated by the local business to fund the build-out of the wireless operations.
Monroe, La.-based CenturyTel said it was considering the sale of its wireless unit because it wanted to focus on its land-line business and pursue acquisitions in that sector.
It rejected Alltel’s bid because it did not fit with its strategy.
Sources said the effort to sell or swap CenturyTel’s wireless unit remains in the early stages. “No one has even done due diligence yet,” one source said.
CenturyTel also said it was highly suspicious of Alltel’s motives in prematurely disclosing to the public CenturyTel’s exploration of splitting its two units. Alltel made the disclosure when it announced its bid on Tuesday.
CenturyTel officials were not available for comment.
Under Alltel’s proposal, shareholders would receive either $43 in cash or 0.6934 share for each CenturyTel share. The company said it would pay no more than 50% of the total value in cash. Alltel also would assume $3.1 billion in debt.
