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CenturyTel Rejects Another Alltel Merger Bid

August 15, 2001|ALAN CLENDENNING | ASSOCIATED PRESS

NEW YORK — Alltel Corp., a wireless, local and long-distance telephone services provider, made a $6.1-billion unsolicited bid Tuesday to buy CenturyTel, which provides local telecommunications services in 21 states.

CenturyTel turned down the offer, saying it was identical to a previous bid that was rejected.

Under the proposal, CenturyTel shareholders would receive either $43 a share or 0.6934 Alltel share for each CenturyTel share. Alltel also would assume nearly $3 billion in debt.

The combined company would be a rural communications powerhouse with about 7.2 million wireless customers, 4.4 million telephone lines and more than $10 billion in revenue, Little Rock, Ark.-based Alltel said.

The merger "would combine the highly complementary wireless and wire-line markets of the two companies to create substantially expanded scale and scope and new opportunities for superior shareholder return," said Joe T. Ford, Alltel's chairman and chief executive.

CenturyTel, based in Monroe, La., is a local-exchange carrier that provides phone services in rural areas, suburbs and small towns throughout the country.

CenturyTel also offers cable TV, long-distance, Internet access and business data services and security monitoring in some markets. The company is upgrading its analog cellular systems to digital TDMA (time division multiple access) technology.

Alltel is the sixth-largest U.S. wireless carrier with 6.3 million customers. It has communications customers in 24 states and provides information services to telecommunications, financial and mortgage clients in 55 countries and territories.

Alltel made its offer after CenturyTel twice rejected overtures for a merger. The latest rejection came Friday, Alltel President Scott Ford said in a letter to CenturyTel President and Chief Executive Glen F. Post. Scott Ford is Joe Ford's son.

Post said CenturyTel is not for sale and intends to move forward with a plan to separate its wireless and traditional telephone service businesses, according to the letter, made public by Alltel when it announced the bid.

CenturyTel reiterated that the company is not for sale in its statement Tuesday.

Ford said he believes that the merger would "provide a far superior return to CenturyTel's stockholders than CenturyTel would otherwise achieve," pointing out that the offer values CenturyTel at a 40% premium to its closing price Tuesday.

Annmarie Sartor, a CenturyTel spokeswoman, would not comment on whether the company plans to separate any of its businesses.

If the deal goes through, the combined company would be able to cut cellular roaming fees, making it easier to attract customers in contiguous areas because of the larger local calling areas, said James Ott, a telecommunications analyst with Hibernia Southcoast Capital.

Before news of the deal was released, Alltel shares rose 51 cents to close at $61.06 and CenturyTel rose 15 cents to close at $30.62, both on the New York Stock Exchange.

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