CenturyLink to buy Level 3 for $34 billion

CenturyLink agreed to buy Level 3 Communications for about $34 billion in cash and stock, creating a more formidable competitor to AT&T in the market to handle heavy internet traffic for businesses.

The acquisition values Level 3 at $66.50 a share, the companies said in a statement Monday. That's about 42 percent above where the Broomfield, Colo.-based company was trading last week, before reports surfaced of a potential acquisition by CenturyLink, which is based in Monroe, La.

The value of the deal includes assumed debt.

Both companies have amassed giant networks to haul internet traffic through deals over the years.

Level 3 is one of the largest providers used by internet services including Netflix and Google to route traffic across the web, operations that would bolster CenturyLink's core offerings to businesses. The deal also promises to help CenturyLink by giving it access to about $10 billion in tax credits that Level 3 is carrying on its books, Jennifer Fritzsche, an analyst with Wells Fargo Securities LLC, said last week.

CenturyLink Chief Executive Officer Glen Post will remain CEO of the combined company, while Level 3 Chief Financial Officer Sunit Patel will be CFO.

Level 3 was the second-biggest U.S. provider of ethernet services - running high-bandwidth internet connections for companies - in the first half of this year, trailing only AT&T, according to Vertical Systems Group Inc. CenturyLink was fifth on the list.

CenturyLink, which has been exploring the sale of its data center business, is one of the biggest phone companies in the United States, formed after CenturyTel Inc. bought Embarq Corp. in 2009 and acquired Qwest Communications International Inc. two years later.

'The combination makes a lot of sense given the combination of Level 3's and CTL's legacy Qwest national wireline business networks,” Phil Cusick, an analyst at JPMorgan Chase & Co., said in a note Monday, referring to CenturyLink by its ticker symbol