NEW YORK (Reuters) - Rural phone company CenturyTel Inc said it will buy Qwest Communications International Inc for about $10.6 billion in stock.
The deal combines two of the largest landline telephone companies in the United States. Qwest shareholders will receive 0.1664 CenturyTel shares for each share of Qwest common stock they own.
Based on CenturyTel's closing price on Wednesday, the Qwest shares holders would receive an equivalent of $6.02 of CenturyTel stock, which represents a premium of about 15 percent over Qwest's closing stock price.
CenturyTel, which is changing its name to CenturyLink, said the transaction reflects an enterprise value of Qwest of about $22.4 billion, including the assumption of $11.8 billion of Qwest net debt outstanding.
CenturyTel Chief Executive Glen Post said the deal improves its ability to deploy new high-speed services to business customers, and expand the availability of broadband connections to consumers.
Qwest analyst Chris King of Stifel Nicolaus said that while CenturyTel was adding "a lot of scale" in buying Qwest, excitement surrounding the deal may be muted.
"It's buying a company with faster declining revenue than it has," he said.
Qwest has experienced a fall in landline subscribers as the economy weakened and customers disconnected home phones and shifted to cellphones.
After the deal closes, CenturyTel's board will add four members from the current Qwest board, including Qwest CEO Edward Mueller. The company will be headquartered in Monroe, Louisiana, but it will keep a regional headquarters in Denver where Qwest is based.
Qwest shares were up 9.7 percent, or 51 cents, at $5.75 in premarket trading.
(Reporting by Franklin Paul and Sinead Carew; Editing by Derek Caney, Dave Zimmerman)
