The deal will result in higher bandwidth and faster connections for customers of the combined company.
CenturyLink Inc., a telecom company, has stated it would acquire Level 3 Communications Inc, in a cash-and-stock deal for equity worth $19.43 billion. It plans on using this acquisition to finance its high-speed data services and expand its fiber optic network.
For every Level 3 share, CenturyLink will offer $26.50 in cash and 1.4286 of its own shares.
With the story hitting the market, Level 3’s shares were up by 3.9% to $56.15 in light premarket trading. CenturyLink’s shares were unchanged.
The deal will see Level 3’s enterprise services merge with that of CenturyLink’s network so as to provide customers integrated internet and telephone services.
Along with the debt component, the deal is valued at about $34 billion.
As of Wednesday’s close, with CenturyLink’s share at $66.50, it is paying a premium of 42% for Level 3’s Wednesday’s closing price.
The deal comes at a time when customers of both companies are seeking higher and faster bandwidth to move their data around to run their businesses.
Expected to close by the end of the third quarter of 2017, the deal will increase CenturyLink’s fiber optic network by 200,000 miles.
CenturyLink shareholders will own about 51% of the combined company and the rest will be owned by Level 3 shareholders.