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CenturyTel to buy Qwest for $10.6 billion

Goldstein and Bartash write for MarketWatch.com / McClatchy.

CenturyTel Inc. on Thursday said it would buy Qwest Communications International Inc. for $10.6 billion in stock, making it the third-largest provider of traditional local-phone service in the United States.

The deal values Qwest at $6.02 a share and represents a 15% premium above Qwest’s closing price on Wednesday.

The proposed merger is the latest in a series of deals that have consolidated a splintered local-phone industry. The landline business has been shrinking for years as customers switch to cable phone service or rely entirely on wireless.

The combined firm would have annual revenue topping $19 billion and would serve nearly 40 states, with 17 million phone connections, 5 million broadband customers and 1.4 million video customers.

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CenturyTel, once a sleepy rural company in Louisiana, has been especially aggressive, snapping up the former local business of Sprint Nextel Corp. last year.

The move to acquire Denver-based Qwest would make CenturyTel the third-largest local carrier in the country, not far behind AT&T; Inc. and Verizon Communications Inc.

Under the agreement, CenturyTel would swap 0.1664 of its shares for each share of Qwest. CenturyTel stockholders would own 50.5% of the combined company and Qwest investors 49.5%, marking the deal as a rare “merger of equals.”

At the same time, CenturyTel will assume $11.8 billion in Qwest debt.

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