CenturyLink Rises as Activist Firm Corvex Reveals 5.5% Stake

  • Corvex’s Keith Meister sees 40% upside in CenturyLink shares
  • Meister calls for keeping Level 3 CEO as part of new company

Keith Meister said his activist firm amassed a 5.5 percent stake in CenturyLink Inc. and sees 40 percent upside in the stock as it completes an acquisition aimed at creating a more formidable competitor in the market for business telecommunication services.

CenturyLink’s $34 billion acquisition of Level 3 Communications Inc. is “game changing,” Corvex Management’s Meister said Monday at the Sohn Investment Conference in New York. The new stake is Corvex’s largest holding, he said. His hedge fund later filed an activist 13D, officially disclosing the investment.

Shares of Monroe, Louisiana-based CenturyLink rose 5.1 percent to $24.80 at the close of trading in New York.

Corvex is pushing to keep Level 3 Chief Executive Officer Jeffrey Storey as part of the combined company. Storey should first serve as president alongside CenturyLink CEO Glen Post for a year, and then Post would become chairman and Storey would become CEO, Meister said.

“We need both to be on the field at the same time,” he said. “It’s an elegant transition, it’s been done before, and everyone wins.”

Pandora, Yum!

CenturyLink, which provides communications services, on Oct. 31 announced it was buying Level 3, betting on the fiber-optic lines that businesses use to spirit their data around the world. The company said it would buy Level 3 to build a bigger rival to telecommunication giants AT&T Inc. and Verizon Communications Inc.

Level 3 is one of the largest providers used by internet services including Netflix Inc. and Google to route traffic across the web. CenturyLink in November agreed to sell its data center and collocation business to a group of private investors for $2.15 billion, in part to fund the Level 3 deal.

Corvex has most recently campaigned at online radio service Pandora Media Inc., which is seeking investments from music labels and renegotiating licensing deals to reduce its costs, people familiar have said. Pandora agreed Monday to receive at least $150 million from KKR & Co. while it searches for a potential buyer of the company.

Last month, Meister outlined his views on another investment, Bio-Rad Laboratories Inc., at another conference.

Meister, 44, who previously worked for billionaire activist investor Carl Icahn, formed New York-based Corvex at the end of 2010. He has also recently been active at pipeline operator Williams Cos., fast-food chain Yum! Brands Inc. and jewelry group Signet Jewelers Ltd., among others.

He successfully lobbied Yum! to spin off its China business. He stepped down from the fast-food giant’s board in February.

— With assistance by Katia Porzecanski

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