Combination Creates Leading Communications Company
MONROE, La., and OVERLAND PARK, Kan., Oct. 27 /PRNewswire-FirstCall/ --
CenturyTel, Inc. (NYSE: CTL) and Embarq Corporation (NYSE: EQ) announced
today that their Boards of Directors have approved a definitive agreement
under which CenturyTel will acquire EMBARQ in a tax free, stock-for-stock
transaction creating one of the leading communications companies in the
United States.
Under the terms of the agreement, EMBARQ shareholders will receive 1.37
CenturyTel shares for each share of EMBARQ common stock they own. Based on
the closing stock price for CenturyTel on October 24, 2008, this
consideration would be equivalent to $40.42 of CenturyTel stock for each
EMBARQ share, representing a premium to EMBARQ shareholders of
approximately 36% over EMBARQ's closing stock price on October 24, 2008 and
11% over EMBARQ's average closing stock price during the past thirty
calendar days. The transaction reflects an enterprise value of
approximately $11.6 billion, including the assumption of $5.8 billion of
EMBARQ's debt. Upon closing of the transaction, EMBARQ shareholders are
expected to own approximately 66% and CenturyTel shareholders are expected
to own approximately 34% of the combined company. The parties expect the
transaction to be accretive to CenturyTel's free cash flow per share in
2010, the first full year following the expected closing.
This transaction combines two leading communications companies with
customer-focused, industry-leading capabilities. The two companies have a
combined operating presence in 33 states with approximately eight million
access lines and two million broadband customers. The combined company is
expected to have pro forma revenue in excess of $8.8 billion, pro forma
EBITDA of approximately $4.2 billion, pro forma leverage of 2.1 times
EBITDA and pro forma free cash flow of approximately $1.8 billion, based on
anticipated full run-rate synergies and operating results for the twelve
months ended September 30, 2008.
Glen F. Post III, CenturyTel's Chairman and Chief Executive Officer,
said, "This transaction is a significant win for the shareholders of
CenturyTel and EMBARQ, as well as our respective employees, customers and
the communities we serve. EMBARQ has invested in building a base of
high-quality assets positioned to create long-term value. We expect that
bringing EMBARQ and CenturyTel together will accelerate both companies'
strategic plans, diversify our revenues and provide us with the expanded
networks, expertise and financial resources to build long-term value for
shareholders. I am confident that the talent and dedication of CenturyTel
and EMBARQ employees will enable us to quickly realize the significant
potential inherent in this combination.
"In addition to bringing together the complementary assets, geographic
coverage and outstanding employees of both companies, this combination
unites two very similar corporate cultures that share a strong commitment
to their customers, employees and communities. I look forward to working
with the combined CenturyTel and EMBARQ team to continue providing
outstanding service and enhanced offerings to our customers while
delivering strong returns to all our shareholders."
Tom Gerke, EMBARQ's Chief Executive Officer, said, "In CenturyTel, we
have found a terrific strategic partner, one with an outstanding history of
providing quality and innovative products and services to its customers
across the country. This transaction is expected to deliver immediate value
to our shareholders and provide significant growth potential via a combined
company that is better positioned to compete and win in an increasingly
competitive marketplace. We are looking forward to joining with a partner
who shares our commitment to customers, employees and the communities we
serve."
"Shareholders and consumers alike should be excited by the potential
benefits this combined company will bring to the marketplace," said William
A. Owens, current non-executive Chairman of EMBARQ's Board and future
non-executive Chairman of the combined company. "This merger will join
together two industry leaders in their own right to create a dynamic new
competitor in the communications industry."
Benefits of the Transaction
-- Enhanced Competitive Position: The combined company is expected to
be even more competitive, with significantly increased scale to facilitate
economically attractive deployment of growth products and services
including expanded IPTV, broadband and wireless data offers. The two
companies have a combined operating presence in 33 states with
approximately eight million access lines, two million broadband customers
and approximately 400,000 video subscribers.
-- Significant Synergy Opportunities: The transaction is expected to
generate synergies of approximately $400 million annually within the first
three years of operation. Key drivers of these synergies include reduction
of corporate overhead, elimination of duplicate functions, enhanced revenue
opportunities and increased operational efficiencies through the adoption
of best practices and capabilities from each company.
-- Financial Strength and Flexibility: CenturyTel expects the
transaction to be accretive to its 2010 free cash flow per share, the first
full year following the expected closing. The pro forma combined company's
pro forma leverage is 2.1 times EBITDA for the twelve months ended
September 30, 2008 including synergies on a full run-rate basis. This sound
capital structure is well suited for long-term stability. It should allow
ample funding for the business and the capacity to continue returning
substantial capital to shareholders going forward.
Dividend Policy, Share Repurchase Program and Pro Forma Leverage
Each company plans to continue its current dividend policy through the
close of the transaction. CenturyTel has suspended its current share
repurchase program pending completion of this transaction. Post closing,
subject to its intention to maintain an investment grade credit rating,
CenturyTel expects to continue its current dividend policy and to return a
substantial portion of the combined company's free cash flow to
shareholders through opportunistic share repurchase programs.
Management, Board Composition and Headquarters
The combined company's senior leadership team will be comprised of
executives from both CenturyTel and EMBARQ. Glen Post will be Chief
Executive Officer, Tom Gerke will assume the role of executive
Vice-Chairman of the Board, Karen Puckett will be Chief Operating Officer
and Stewart Ewing will serve as Chief Financial Officer.
William A. Owens, currently non-executive Chairman of the EMBARQ Board
of Directors, will be the non-executive Chairman of the combined company
and Harvey Perry will continue as non-executive Vice-Chairman.
Following the closing of the transaction, the Board of Directors of the
combined company will be composed of eight current CenturyTel Board members
and seven members from the current EMBARQ Board.
Corporate headquarters will be in Monroe, Louisiana. The combined
company will also maintain a significant presence in Overland Park, Kansas.
The name of the combined company will be determined prior to the close
of the transaction.
Approvals and Timing
The transaction is subject to regulatory approvals, including
expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act as well as approvals from the
Federal Communications Commission, certain state public service commissions
and other customary closing conditions. The transaction is also subject to
the approval of CenturyTel and EMBARQ shareholders. The companies
anticipate closing this transaction in the second quarter of 2009.
CenturyTel has received commitments from Bank of America, Barclays Bank
PLC, Morgan Stanley Senior Funding, Inc. and SunTrust Robinson Humphrey to
refinance EMBARQ's bank debt at closing.
Advisors
Barclays Capital and Morgan Stanley are acting as CenturyTel's lead
financial advisors with Banc of America Securities L.L.C., Merrill Lynch &
Co., and Wachovia Capital Markets, L.L.C. acting as additional financial
advisors. Wachtell, Lipton, Rosen & Katz and Jones Walker Waechter
Poitevent Carrere & Denegre L.L.P. are CenturyTel's legal advisors. JP
Morgan is acting as financial advisor to EMBARQ, and Cravath, Swaine &
Moore L.L.P. and Morris, Nichols, Arsht & Tunnell are legal advisors.
Teleconference and Webcast
CenturyTel and EMBARQ will host a conference call with the financial
community today, October 27, 2008, at 10:00 am Eastern Time / 9:00 am
Central Time to discuss this morning's announcement as well as CenturyTel's
and EMBARQ's third quarter financial results. The conference call will be
streamed live over CenturyTel's Web site at http://www.centurytel.com and over
EMBARQ's Web site at http://www.embarq.com. Interested parties can also access the
call by dialing (866) 610-1072 (international: (973) 935-2840), and
referencing code 70807213, ten minutes prior to the start of the call.
A digital recording of the call will be available as promptly as
practicable and ending November 10, 2008 at 11:59 pm Eastern Time / 10:59
pm Central Time. The replay can be accessed by dialing (800) 642-1687
(international: (706) 645-9291) and referencing code 70807213. A replay of
the call will also be available on the investor relations sections of both
companies' web sites.
About CenturyTel
CenturyTel (NYSE: CTL) is a leading provider of communications,
high-speed Internet and entertainment services in small-to-mid-size cities
through its broadband and fiber transport networks. Included in the S&P 500
Index, CenturyTel delivers advanced communications with a personal touch to
customers in 25 states. Visit us at http://www.centurytel.com.
About EMBARQ
Embarq Corporation (NYSE: EQ), headquartered in Overland Park, Kansas,
offers a complete suite of communications services. EMBARQ has operations
in 18 states and is in the Fortune 500(R) list of America's largest
corporations. For consumers, EMBARQ offers an innovative portfolio of
services that includes reliable local and long distance home phone service,
high-speed Internet, wireless, and satellite TV from DISH Network(R) -- all
on one monthly bill. For businesses, EMBARQ has a comprehensive range of
flexible and integrated services designed to help businesses of all sizes
be more productive and communicate with their customers. This service
portfolio includes local voice and data services, long distance, Business
Class High Speed Internet, wireless, satellite TV from DIRECTV(R), enhanced
data network services, voice and data communication equipment and managed
network services. For more information, visit http://www.embarq.com.
Forward Looking Statements
Except for the historical and factual information contained herein, the
matters set forth in this filing, including statements as to the expected
benefits of the acquisition such as efficiencies, cost savings, enhanced
revenues, growth potential, market profile and financial strength, and the
competitive ability and position of the combined company, and other
statements identified by words such as "estimates," "expects," "projects,"
"plans," and similar expressions are forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject
to risks and uncertainties that may cause actual results to differ
materially, including receipt of required approvals by CenturyTel and
EMBARQ stockholders and regulatory agencies, the possibility that the
anticipated benefits from the acquisition cannot be fully realized or may
take longer to realize than expected, the possibility that costs or
difficulties related to the integration of EMBARQ operations into
CenturyTel will be greater than expected, the ability of the combined
company to retain and hire key personnel, the impact of regulatory,
competitive and technological changes and other risk factors relating to
our industry as detailed from time to time in each of CenturyTel's and
EMBARQ's reports filed with the Securities and Exchange Commission (SEC).
There can be no assurance that the proposed acquisition will in fact be
consummated. You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release. Unless
legally required, CenturyTel and EMBARQ undertake no obligation to update
publicly any forward- looking statements, whether as a result of new
information, future events or otherwise.
Additional Information
CenturyTel and EMBARQ plan to file a joint proxy statement/prospectus
with the SEC. INVESTORS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. You will be able to obtain the joint proxy
statement/prospectus, as well as other filings containing information about
CenturyTel and EMBARQ, free of charge, at the website maintained by the SEC
at http://www.sec.gov. Copies of the joint proxy statement/prospectus and the
filings with the SEC that will be incorporated by reference in the joint
proxy statement/prospectus can also be obtained, free of charge, by
directing a request to CenturyTel, 100 CenturyTel Drive, Monroe, Louisiana,
71203 Attention: Corporate Secretary, or to EMBARQ, 5454 West 110th Street,
Overland Park, KS, 66211, Attention: Shareholder Relations. The respective
directors and executive officers of CenturyTel and EMBARQ and other persons
may be deemed to be participants in the solicitation of proxies in respect
of the proposed transaction. Information regarding CenturyTel's directors
and executive officers is available in its proxy statement filed with the
SEC by CenturyTel on March 27, 2008, and information regarding EMBARQ
directors and executive officers is available in its proxy statement filed
with the SEC by EMBARQ on March 17, 2008. These documents can be obtained
free of charge from the sources indicated above. Other information
regarding the interests of the participants in the proxy solicitation will
be included in the joint proxy statement/prospectus and other relevant
materials to be filed with the SEC when they become available. This
communication shall not constitute an offer to sell or the solicitation of
an offer to sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. No offer
of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
SOURCE CenturyTel, Inc.; Embarq Corporation
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Related links:
http://www.centurytel.com
http://www.embarq.com
CONTACT:
Tony Davis of CenturyTel, +1-318-388-9525,
tony.davis@centurytel.com; or Analysts & Investors, Trevor
Erxleben, 1-866-591-1964, investorrelations@embarq.com, or Media,
Francisco Ybarra, +1-913-345-6529, francisco.a.ybarra@embarq.com,
both of EMBARQ
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