Louisiana-based CenturyLink (NYSE: CTL) said it agreed to acquire Colorado-based Level 3 Communications Inc. (NYSE: LVLT) in a cash and stock deal valued at approximately $34 billion, including the assumption of debt.

At closing, CenturyLink shareholders will own approximately 51 percent and Level 3 shareholders will own approximately 49 percent of the combined company. Level 3 shareholders will receive $26.50 per share in cash and approximately 1.43 shares of CenturyLink stock.

Level 3 provides local, national and global communications services to enterprise, government and carrier customers, including fiber and infrastructure solutions IP-based voice and data communications, wide-area Ethernet services, video and content distribution, data center and cloud-based solutions. Level 3 serves customers in more than 500 markets in over 60 countries through fiber networks on three continents, connected by undersea facilities.

CenturyLink is a global communications, hosting, cloud and IT services company. it offers network and data systems management, Big Data analytics and IT consulting, and operates more than 55 data centers in North America, Europe and Asia. The company provides broadband, voice, video, data and managed services over a robust 250,000-route-mile U.S. fiber network and a 300,000-route-mile international transport network.

The combined company will have the ability to offer CenturyLink’s larger enterprise customer base the benefits of Level 3’s global footprint with a combined presence in more than 60 countries. In addition, the combined company will be positioned to further invest in the reach and speeds of its broadband infrastructure for small businesses and consumers.

“The digital economy relies on broadband connectivity, and together with Level 3 we will have one of the most robust fiber network and high-speed data services companies in the world,” said Glen Post, CenturyLink chief executive and president.

“This is a compelling transaction for our customers, shareholders and employees,” said Jeff Storey, president and chief executive of Level 3. “In addition to the substantial value delivered to shareholders, the combined company will be uniquely positioned to meet the evolving and global needs of enterprise customers.”

The deal increases CenturyLink’s network by 200,000 route miles of fiber, which includes 64,000 route miles in 350 metropolitan areas and 33,000 subsea route miles connecting multiple continents. CenturyLink’s on-net buildings are expected to increase by nearly 75 percent to approximately 75,000, including 10,000 buildings in EMEA and Latin America.

The combined company will have significantly improved network capabilities, creating a world-class enterprise player with approximately $19 billion in pro forma business revenue and $13 billion in business strategic revenue, for the trailing twelve months ended June 30, 2016.

The increased scale afforded by the combined company is expected to generate $975 million of annual run-rate cash synergies.

The combined company is expected to have improved adjusted EBITDA margins, revenue growth and pro forma net leverage of less than 3.7x at close, including run-rate synergies. The combined company will benefit from Level 3’s nearly $10 billion of net operating losses (NOLs). These NOLs will substantially reduce the combined company’s net cash tax expense over the next several years.

CenturyLink expects the transaction to be accretive to free cash flow in the first full year following the closing, which is expected by the end of third quarter 2017, subject to shareholders’ and regulatory approvals, and other customary conditions..

The combined company will be headquartered in Monroe, Louisiana and will maintain a significant presence in Colorado and the Denver metropolitan area.

BofA Merrill Lynch and Morgan Stanley & Co. LLC acted as CenturyLink’s financial advisors, and Evercore provided a fairness opinion. Wachtell, Lipton, Rosen & Katz and Jones Walker are acting as CenturyLink’s legal advisors. Citigroup acted as financial advisor to Level 3, and Lazard provided a fairness opinion. Willkie Farr & Gallagher LLP acted as legal advisor to Level 3.

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