CenturyTel Inc. said Thursday that it will buy Qwest Communications International Inc. in a stock swap worth $10.6 billion, creating a telecommunications giant serving customers in 37 states.
The deal would unite two major providers of traditional landline telephone service.
CenturyTel, which does business as CenturyLink, acquired Embarq Inc., the landline service company once part of Sprint Inc., last year.
Qwest provides traditional phone service in 14 mostly Western states and is a successor to one of the regional Baby Bell companies spawned by the breakup of AT&T in the 1980s.
CenturyTel is offering stock worth about $6.02 per share for each Qwest share, a premium of about 15 percent to Qwest's Wednesday closing price of $5.24.
Qwest stockholders will receive 0.1664 CenturyTel shares for each share they own and will hold 49.5 percent of the new company, while CenturyTel stockholders will own 50.5 percent of the business.
CenturyTel, which is based in Monroe, La., is also assuming $11.8 billion in debt of Denver-based Qwest.
Both companies' boards have approved the tax-free acquisition, which is expected to close in the first half of 2011. They expect the acquisition to save the combined company $625 million over three to five years following the close of the deal.
Qwest shares leapt 51 cents, or 9.7 percent, to $5.75 ahead of regular trading, while CenturyTel slipped 70 cents, or 1.9 percent, to $35.50.
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