Century Link Merger with Level 3 Raises Stock Market Questions

The Connected Home is Proud to be an Authorized Representative for Century Link Phones and Century Link Internet Services

Today we are sharing some information on Century Links recent acquisition of Level 3 Communications. We are sure this will only build the long term value of Century Link, but we note that it may rock the boat in terms of Wall Street for a while.

In the case of the $34 billion merger between CenturyLink Inc. (NYSE: CTL) and Level 3 Communications Inc. (NYSE: LVLT), the deal may have done more than just pressure the acquirer. The initial read a few days after the deal’s announcement could suggest that CenturyLink and Level 3 just ruined their stock charts for some time ahead. Still, CenturyLink did announce later in the week that it is selling its data center business for $2.15 billion in a fresh news announcement.  Read more..

CenturyLink CEO Glen Post addresses shareholders during the company’s annual meeting at the company headquarters in Monroe last year.(Photo: FILE/USA TODAY NETWORK OF LOUISIANA)

CenturyLink, which last week announced a blockbuster deal to buy Level 3 Communications in a $34 billion deal, will help pay for it by selling its data centers and colocation business to a consortium led by BC Partners for $2.3 billion.thetowntalk.com

But making CenturyLink, Inc. an even more interesting and timely stock to look at, is the fact that in trading on Thursday, shares of CTL entered into oversold territory, changing hands as low as $22.86 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

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Is CTL Stock’s Dividend Yield Threatened?
Centurylink Inc (NYSE:CTL) stock has been in hot water for long time, despite paying a market-beating dividend yield. Income investors have been questioning how long this telecom giant will be able to sustain its payout when sales are shrinking.

But this week, CenturyLink surprised investors by announcing plans to buy Level 3 Communications, Inc. (NYSE:LVLT) for about $34.0 billion in cash and stocks in an effort to grab a share of the heavy Internet traffic market for businesses. The acquisition, subject to regulatory approval, values Level 3 at $66.50 a share, offering a 42% premium over its stock price being traded before reports of the potential acquisition by CenturyLink. The equity value of the deal, excluding debt, is about $24.0 billion. (Source: “Centurylink To Acquire Level 3 Communications,” Centurylink Inc, October 31, 2016.)

Taking into consideration the immediate market reaction, it seems investors aren’t happy with this deal, as CTL stock plunged over 12% soon after the details of this acquisition surfaced. This happened despite CenturyLink’s statement that it expects to maintain its annual dividend of $2.16 per share.

What ever the near term future of Century Link’s stock price, we are confident that they will continue to offer good value to Minnesota Phone and Internet users.  If you are looking to add change or upgrade your phone or Internet service be sure to contact us at The Connected Home. 612-424-8483  

​We are your source for century link services.

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