CenturyTel to Buy Embarq for $40.42 Per Share in Stock

CenturyTel (CTL) has agreed to acquire Embarq (EQ) for $11.6 billion in stock and the assumption of debt. The deal calls for each EQ share to be exchanged for 1.37 CTL shares, a 36 percent premium over Friday’s closing price. The deal includes the assumption of $5.8 billion in debt. EQ holders will own 66 percent of the combined company, with 34 percent for existing CTL holders.

CenturyTel said the transaction is expected to be accretive to free cash flow in 2010, the first full year after closing.

The two phone companies together have about eight million access lines and two million broadband customers. Combined, the company expect to have revenue for the 12 months through September in excess of $8.8 billion, pro forma EBITDA of about $4.2 billion, leverage of 2.1 times EBITDA and free cash flow of about $1.8 billion.

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