Embarq for sale; buyer on the fringe

Staff reports
Published: October 28, 2008

Embarq, the phone company that serves parts of southern Campbell County, is for sale.

CenturyTel Inc. on Monday said it would buy Embarq Corp., another larger phone company, for stock initially valued at $5.8 billion.

Analysts said the move sets the stage for further deals for rural phone companies, which have lost phone customers to wireless and cable companies.

The combined company will have about 8 million lines spanning 33 states, mainly in rural areas.

Locally, Embarq’s service area includes the towns of Brookneal and Altavista.

The deal still needs approval from both companies’ shareholders, the Federal Communications Commission and the Department of Justice.

CenturyTel management will dominate the combined company, but Embarq shareholders will own two-thirds of it.

Embarq shareholders will get 1.37 shares of CenturyTel for each share of Embarq. Based on CenturyTel’s Friday close of $29.50, that’s equivalent to $40.42 worth of CenturyTel stock for each Embarq share owned.

CenturyTel shares fell $3.88, or 13 percent, to close Monday at $25.62, making the value of the offered shares $5.05 billion. The day’s low of $24.66 was the lowest level for the shares since 2002.