Merger between CenturyLink and Level 3 could create $50bn giant

28 Oct 201611 Shares

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CenturyLink sign. Image: Jonathan Weiss/Shutterstock

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The next giant corporate merger is in the works, as CenturyLink and Level 3 aim to create a telecoms company worth around $50bn.

Wall Street has had some major corporate mergers and takeovers of late, with the recent move by AT&T to purchase Time Warner for the princely sum of $85bn. Now, two lesser-known corporations, CenturyLink and Level 3, want to join in on the action.

According to Reuters, the decision for both companies to merge will create a telecoms giant worth around $50bn, whereby CenturyLink’s broadband network would be combined with Level 3’s enterprise services.

The end result will be a single entity that could help their corporate clients gain greater bandwidth and an infrastructure to handle vast quantities of data, which market analysts have valued as high as $100bn in annual revenues in the US.

Sources close to the deal have said that talks are at an advanced stage and could be finalised and announced as early as the beginning of November.

The Wall Street Journal has said that Level 3 and CenturyLink are worth $16.8bn and $15.2bn, respectively.

Fewer mergers, but higher stakes

The decision to merge with CenturyLink will be a welcome one for Level 3. In the early 2000s, it found itself on the brink of closure following the dot-com crash, with its stock having fallen more than 14pc before the beginning of these talks.

Meanwhile, CenturyLink will hope Level 3 can boost its profile outside of the rural US as it aims to compete with the giants of AT&T and Verizon, as well as move into cloud services.

The high-stakes merger will cap off a quiet but lucrative time for major corporate tech deals, with Qualcomm’s decision to purchase NXP Semiconductors for $39bn last week being another recent example.

CenturyLink sign. Image: Jonathan Weiss/Shutterstock

Colm Gorey is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com