Related stories
ALLTEL proposes merger
with CenturyTel
Rebuffed by CenturyTel's board of directors, ALLTEL released a letter late yesterday (August 14) afternoon outlining a proposed merger of the two companies. Last week, CenturyTel's board told the larger company, "The company is not for sale."
Under the proposed merger, stockholders would receive a choice of either $43.00 per share in cash or 0.6934 ALLTEL shares, subject to a proration. The total value of the offer is over $9 billion including assumed debt. The value of the offer represents approximately a 40% premium over CenturyTel's closing stock price Wednesday, and a 46.8% premium over CenturyTel's average share price over the past six months.
ALLTEL has more than 10 million communications customers in 24 states and more than $7.5 billion in annual revenues. The company provides information services to telecommunications, financial and mortgage clients in 55 countries and territories.
CenturyTel has more than three million customers in 21 states.
According to an ALLTEL press release:
The proposed merger would create a rural communications powerhouse with about 7.2 million wireless customers and 58 million POPs, 4.4 million wireline customers, approximately $10 billion in revenue, $4 billion in operating cash flow, a solid investment grade credit rating, and expanded scale and scope and associated revenue and expense improvement opportunities. ALLTEL expects the transaction to be minimally dilutive to its cash earnings in the first year and accretive thereafter based on reasonable synergies.
ALLTEL will hold a conference call at 7:30 a.m. CDT on Wednesday, August 15, 2001, to discuss the proposal. Interested parties can access the call by dialing 877-493-2983 five minutes prior to the start time.
The conference call will also be streamed live over the company's Web site at www.alltel.com/investors-index.html. A replay of the call will be available two hours following the Web cast.
CenturyTel Issues Statement in Response to ALLTEL Unsolicited Proposal
CenturyTel, Inc. (NYSE: CTL) confirmed today (Aug. 14) that it has received an unsolicited proposal from ALLTEL Corporation (NYSE: AT), which is identical to a previously submitted proposal by ALLTEL.CenturyTel's Board had unanimously rejected the previous proposal after full consideration and after receiving advice from J.P. Morgan and Wachtell, Lipton, Rosen & Katz, its financial and legal advisors.
CenturyTel said that there is no reason for further consideration of the previously rejected proposal. CenturyTel's Board has determined that the Company is not for sale.
CenturyTel, Inc. provides communications services including local exchange, wireless, long distance, Internet access and data services to more than three million customers in 21 states. The company, headquartered in Monroe, Louisiana, is publicly traded on the New York Stock Exchange under the symbol CTL. CenturyTel is the 8th largest local exchange telephone company, based on access lines, and the 8th largest cellular company, based on population equivalents owned, in the United States.
Text of letter
August 14, 2001
Mr. Glen F. Post, III
Vice Chairman, President and Chief Executive Officer
CenturyTel, Inc.
100 CenturyTel Drive
Monroe, Louisiana 71203
Dear Glen:
As you know from our discussions over recent weeks and my ensuing letter, dated July 26, 2001, to you, we at ALLTEL believe that a combination of our two companies would create a dynamic rural communications company with greatly expanded scale and scope and the opportunity to enhance revenue growth, reduce costs, and improve operating efficiencies. With combined revenue of approximately $10 billion and combined operating cash flow of $4 billion, the merged company would be a rural communications powerhouse with the financial base and market position to both enhance growth and capitalize on future opportunities as the telecom industry continues to consolidate. This financial base and market position would deliver superior returns to our shareholders and benefits to our customers, employees, suppliers, and other constituencies.
Unfortunately, on Friday, August 10, 2001, you advised us, for the second time, that the CenturyTel Board has rejected our offer to merge the two companies, citing, as the basis for that rejection, that CenturyTel "is not for sale" and plans, instead, to pursue separating its wireless and wireline businesses.
CenturyTel's plan to separate these businesses, coupled with ALLTEL's continued hope that the CenturyTel Board will reconsider ALLTEL's July 26 merger proposal, has prompted us to deliver this letter resubmitting a written offer to merge CenturyTel and ALLTEL. In resubmitting this offer, we continue in our strong belief that a merger of CenturyTel and ALLTEL would, both in the near-term and long-term, provide a far superior return to CenturyTel's stockholders than CenturyTel would otherwise achieve. ALLTEL's stock has outperformed CenturyTel's stock, on a total return basis, over the last three and five year periods by 65.7 and 30.2 percentage points, respectively.
Accordingly, ALLTEL is resubmitting the proposal set forth in my July 26 letter to combine with CenturyTel in a merger transaction in which CenturyTel's shareholders would have the choice of receiving either $43.00 per share in cash or 0.6934 shares of ALLTEL common stock, subject to a proration of 50% cash and 50% ALLTEL shares. Naturally, as you would expect, this offer is conditioned on CenturyTel not disposing of or acquiring any significant assets, including without limitation, any separation of CenturyTel's wireless and wireline businesses referred to above. This offer represents approximately a 40% premium over CenturyTel's closing stock price today and a 46.8% premium over the average CenturyTel closing stock price for the prior six months.
A merger between our two companies would allow CenturyTel to avoid the significant risks and potential tax inefficiencies of separating CenturyTel's wireless and wireline businesses. Under these circumstances, we believe that your stockholders would agree with this assessment and enthusiastically support the merger. We note that seven of CenturyTel's top ten institutional shareholders are also holders of ALLTEL stock.
Given the strength of ALLTEL's balance sheet, we are confident that the combined company would have a strong investment grade credit rating, a view shared by our financial advisors, Merrill Lynch & Co. and Stephens Inc., who are prepared to commit to arrange financing for this transaction.
We expect that a combination of our companies would have no significant contingencies other than customary conditions that would be included in the definitive merger agreement. We are ready to undertake a mutual due diligence review at your earliest convenience and to meet with your team to negotiate a merger agreement at any time.
In light of the significance of this offer to the CenturyTel and the ALLTEL stockholders, we are publicly releasing the text of this letter.
We are enthusiastic about the potential of this merger. Accordingly, we would appreciate the CenturyTel Board's reconsideration of our offer. We hope you will work with us to make this offer a reality.
Very truly yours,
Scott T. Ford
Sharon Kivisto
and
Matt Pranger
can be reached:
phone:
360.378.3748
fax:
360.378.9748
by e-mail:
news@sanjuanislander.com
by mail:
San Juan Islander
PO Box 1118
Friday Harbor, WA 98250 USA