CenturyLink Inc. completed its purchase of Qwest Communications International Inc. on Friday, combining the country's third- and fourth-largest traditional phone companies into one.
The closing of the $12.2 billion all-stock deal was expected and follows nearly a year of regulatory reviews. The combined company, which will be known as CenturyLink, offers landline phone service in parts of 37 states.
The consolidation is a response to steady cancellation of landlines as households chose to rely on cell phones or cable phone service. By buying up Qwest, CenturyLink will have a chance to cut corporate overhead.
The combined company will have about 15 million phone lines, or as many as Qwest alone had in 2005.
Qwest began its troubled path as a long-haul fiber network in the telecom boom of the late 90s. Helped by its sky-high stock price, it bought traditional "Baby Bell" phone company US West in 2000. It then was ensnared in accounting troubles.
Qwest is the larger company, but its high debt load left it unable to play the consolidator in the industry. That role has instead been taken by CenturyLink, which started as a small rural phone company. For the past decade, it's been buying mainly rural phone companies and lines, culminating in the acquisition of Embarq in 2009 and now the acquisition of Qwest.
The only larger landline phone companies now are AT&T Inc. and Verizon Communications Inc.
CenturyLink is keeping its headquarters in Monroe, La. Qwest's Denver headquarters will turn into one of CenturyLink's six regional headquarters and will also be the overall headquarters for its business services group. The other five regional headquarters will be in Phoenix, Minneapolis, Seattle, Wake Forest, N.C., and Apopka, Fla.
The combined company has about 47,000 employees, and some job cuts can expected from the combination. Both companies have been cutting jobs as they lose landline customers.
CenturyLink shares fell 17 cents, or 0.4 percent, to $41.38 in morning trading Friday. Qwest shareholders are getting 0.1664 shares of CenturyLink stock for each Qwest share.
Qwest shares have been trading near parity with the trade-in value since the deal was announced in May, but the closing gives Qwest shareholders a boost in dividends. Each CenturyLink share carries an annual dividend of $2.90, whereas the corresponding amount of Qwest shares yielded $1.92.