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October 27, 2016
martinwolf Transaction Analysis
CenturyLink in Advanced Merger Talks with Level 3
 
Financial Information*
  • CenturyLink Market Value                     $15.2 billion
  • Level 3 Market Value                             $16.8 billion
Transaction Facts
  • According to media reports published today, CenturyLink (NYSE: CTL) is in advanced discussions with Level 3 Communications (NYSE: LVLT) regarding a merger.
  • After initial reports were published, both CenturyLink and Level 3 shares closed up approximately 10 percent. Pricing information for the deal, as well as the resulting structure of the combined company, was not included in the media reports.
  • The combined company would be an enterprise-focused telecommunications giant with an enterprise value greater than $50 billion.
  • The official announcement could come as early as next week.
In Challenging Space, A History of M&A on Both Sides
  • Falling Prices Hurt Margins: Both CenturyLink and Level 3 have confronted a difficult market - capital costs remain high, but the ongoing shift to mobile has imperiled traditional business models even as demand for bandwidth has skyrocketed thanks to cloud computing and other trends. Greater size, and with it greater economies of scale, are critical to success.
  • M&A History Drives Ultimate Convergence: Both CenturyLink and Level 3 have a history of multi-billion acquisitions - most notably Level 3 with Global Crossing and TW Telecom, and CenturyLink (formerly CenturyTel) with Embarq, Savvis and Qwest Communications. The global Technology, Media & Telecom space has seen $750 billion in acquisitions so far in 2016, less than in 2015 but more than in any other since 2000.
  • Refocusing On Growth Areas: Both companies have sought to recapture growth as traditional areas have dimmed - CenturyLink has its roots in rural local phone service but now operates more than 55 data centers, while Level 3 has branched out from its focus on the enterprise to cater to small and midsize businesses.
For more information about this transaction,  click here to read the initial article in the Wall Street Journal.

martinwolf was not the advisor in this transaction.

*Financial information is not  available, as details of a potential transaction has not been released. However, the Wall Street Journal article announcing the talks included the above valuation data from before the article was published.

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About martinwolf    


With offices in New York and the San Francisco Bay Area, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 140 transactions in nineteen countries and sold seven divisions of Fortune 500 companies. 

 

martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.  

 

To learn more about martinwolf, contact Matthew Putzulu at mputzulu@martinwolf.com.

 

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