M&A update: CenturyLink-Qwest flying through approval process

It’s a busy time on the mergers and acquisitions front, as one deal has taken a step forward with shareholder approval, another announced nearly two years ago has cleared a key divestiture hurdle, and a third long-completed deal continues to issue a ripple effect of negative news.

The deal that passed shareholder muster was the merger of CenturyLink and Qwest Communications. The companies announced today that shareholders from each company approved the deal in separate meetings with votes that were near unanimous in both cases.

The CenturyLink-Qwest deal, announced last April, also received fairly quick approval from the U.S. Department of Justice in July, as well as regulatory approval in seven states. Regulatory reviews are ongoing in the another 14 states, and the Federal Communications Commission also has to provide its stamp before the merger can close. Closing is expected to happen in the first half of next year, the companies said.

Bernie Arnason, managing director with Pivot Media, said the CenturyLink-Qwest deal is not likely to have much of a problem gaining the remaining approvals, though he noted that it is another big integration project for a company that recently absorbed Embarq. "I wouldn't call this a merger of equals for one main reason," he said. "Qwest's crown jewel is their fiber transport network and the enterprise and government business it enables. CenturyLink really lacks anything comparable to that. But I don't think they are biting off more than they can chew. They've done quite well in integrating Embarq. In a perfect world, they would let that transaction digest a little more before this Qwest transaction, but we're far from a perfect world."

Though the merger has been protested by the Communications Workers of America union, it has made speedy progress, something which could never be said of AT&T’s acquisition of Centennial Communications, a deal that was announced in November 2008 and took about a year to navigate the necessary regulatory approvals.

Just this week, AT&T finalized the $235 million sale of some of those Centennial properties in Mississippi and Louisiana to rival Verizon Wireless, an divestiture that was a conditional requirement imposed on AT&T’s Centennial acquisition when the DoJ approved it in October 2009. Though the AT&T-Centennial deal actually closed late last year, this final step took months longer.

Like AT&T, FairPoint Communications faced a long acquisition approval process that ended more than a year after FairPoint announced it was buying landline properties in New England spun off from Verizon. That deal was heavily scrutinized and criticized by regulators, investors and consumers, and it ultimately encountered network transition problems and bankruptcy, which caused management changes that even now are still playing out. FairPoint just last week asked for bankruptcy court approval to name telecom industry vet Paul Sunu as its new CEO, a move which, if approved, would force out current CEO David Hauser.