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 www.centurytel.com and over
EMBARQ's Web site at 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 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 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 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
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