Corvex Builds Stake in CenturyLink
May 08 2017 - 2:04PM
Dow Jones News
By David Benoit
Activist Keith Meister is wading back into telecommunications
companies with a big purchase of CenturyLink Inc. as it buys Level
3 Communications Inc., whose management team he has long
praised.
Mr. Meister's Corvex Management LP owns about 5.5% of
CenturyLink, he disclosed at the Ira Sohn conference in New York on
Monday, and wants to see Level 3 Chief Executive Jeff Storey
eventually become the chief executive of the combined company.
Currently, the companies plan for CenturyLink leader Glen Post to
become CEO and for Mr. Storey to be a nonexecutive director.
"Execution has been substantially weaker at CenturyLink than at
Level 3 for many years," Mr. Meister said at the conference.
""Would you pay a premium to buy the New England Patriots and then
not start Tom Brady?"
CenturyLink wasn't immediately available for comment.
In a presentation, the activist praised the rationale for the
deal, which gives CenturyLink greater exposure to business
customers and the scale to boost its free-cash flow. CenturyLink
gets about two-thirds of its revenue from business customers, while
Level 3's comes entirely from that segment.
At the same investor conference four years ago, Mr. Meister said
he was betting on Level 3 and Mr. Storey as an underappreciated
story in a business that's been shaken up by wireless growth and a
history of consolidation. After that presentation, Level 3 combined
with TW Telecom Inc. and then last October agreed to the $25
billion sale to CenturyLink.
Mr. Meister wants to see Mr. Storey get an executive role that
would lead to him being named CEO in a year. He called for both
executives to be present for the coming few years, but for the
older Mr. Post to gradually cede his roles to Mr. Storey. Mr.
Meister compared Mr. Storey's strong stock returns to the
comparatively weak performance of Mr. Post's CenturyLink.
The so-called wireline business of running telephone and
internet lines has suffered from brutal competition over the past
15 years, hurt by plummeting prices for network bandwidth and high
capital costs. Both companies have been voracious acquirers on
their own right and part of Mr. Meister's pitch was that with
better management, the combined company could cut more costs and
boost the company's cash flow higher to fuel more deals.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
May 08, 2017 13:49 ET (17:49 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Level 3 Communications, Inc. (delisted) (NYSE:LVLT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Level 3 Communications, Inc. (delisted) (NYSE:LVLT)
Historical Stock Chart
From Sep 2023 to Sep 2024