Embarq rejected higher offer to do CenturyTel deal

A few days later, following further negotiations, both bidders submitted their final offers. CenturyTel raised its offer to $40.42 per share, a lower nominal price but in the sagging market, a higher premium – up to 36% from 24%. The other bidder raised its premium as well, from 26% to 37%, with an offer of $40.86 per share. CenturyTel won.

The fact that Embarq took the lower offer is not necessarily surprising, said Gerald Granovsky, vice president and senior analyst for Moody's Investors Service. “Recall that MCI sold to Verizon for less than the Qwest offer, as the board felt that the company's long term future was better off with Verizon.”

Though it’s not known who the other bidder was (Frontier Communications is a likely possibility), analysts on Windstream’s quarterly earnings conference call this month asked why Windstream wasn’t the one combining with Embarq, to which Windstream CEO Jeff Gardner replied, “We were fairly surprised at the timing of the deal, specifically that Embarq decided to sell its business in one of the most volatile markets we’ve seen in this country in 75 years.”

On the same call, Gardner seemed to dial down expectations for major M&A in the near term for Windstream, stressing that the company doesn’t want to stray from its current debt position and adding, “We don’t feel the need to do a deal just to do a deal.”