CenturyTel, Embarq await states' OK; rally predicted for Blockbuster; Life Sciences CEO makes offer

By Cristal Cody

Tupelo, Miss., March 4 - CenturyTel, Inc. and Embarq Corp. need regulatory approval of Embarq's $5.8 billion stock buyout from eight more states, CenturyTel told Prospect News on Wednesday.

As expected, reassured investors sent shares of Blockbuster Inc. up a by quarter, or 113.64%, to close at 47 cents Wednesday after the company denied plans to file bankruptcy.

In other action, East Millstone, N.J.-based Life Sciences Research, Inc. said that the company's chairman and chief executive officer, Andrew Baker, has offered $7.50 a share for its outstanding stock.

Shares of Life Sciences Research jumped $1.25, or 26.10%, to close at $6.04, still well under the "low-ball" offer, an analyst said in an interview.

Meanwhile on Wednesday, stocks were bolstered after a five-day selloff that sent the Dow Jones Industrial Average and the Standard & Poor's 500 index down to historic lows.

The Dow gained 149.82 points, or 2.23%, to close at 6,875.84 on Wednesday.

The S&P 500 added 16.54 points, or 2.38%, to finish at 712.87, and the Nasdaq Composite index rose 32.73 points, or 2.48%, to 1,353.74.

CenturyTel waits on eight states

CenturyTel spokesman Annmarie Sartor told Prospect News on Wednesday that the company is seeking approval of its acquisition of Embarq in California, Illinois, Louisiana, Nevada, Tennessee, Oregon, Pennsylvania and Washington.

In Florida, "we are subject to a waiting period but have preliminary approval," she said. "Each state has unique regulatory procedures for approval, and we are moving through these processes."

CenturyTel and Embarq said late Tuesday that CenturyTel's acquisition of Embarq was approved by five states.

The Georgia, Mississippi and Nebraska public service commissions and the Minnesota and Ohio public utilities commissions granted approval of the deal.

Monroe, La.-based CenturyTel provides communications, high-speed internet and entertainment services in 25 states.

Overland Park, Kan.-based Embarq offers communications services in 18 states.

The combined company will operate in 33 states.

The deal received shareholder approval from both companies in January and has cleared the federal antitrust review.

CenturyTel has offered 1.37 shares for each share of Embarq common stock, and the deal is expected to be completed during the second quarter of 2009.

Embarq's stock added $2.09, or 6.55%, to close Wednesday at $33.98, up from the $29.74 closing price on the last trading day before the deal was announced on Oct. 27.

Shares of CenturyTel rose $1.62, or 6.80%, to close at $25.45.

Blockbuster partially makes up loss

An analyst said Wednesday in a research note that Blockbuster is expected to have a strong showing in its fourth-quarter results.

"And looking at the math, the company is not a candidate for bankruptcy in the near-term as we see it," the analyst said. "We look for a relief rally into the March 19th Q4 call."

The Dallas-based movie rental chain said it has hired the law firm of Kirkland & Ellis LLP to help raise capital and refinance debt, which sent shares down 77.08% on Tuesday to 22 cents.

Blockbuster plans to restructure a $328 million term loan and a revolving credit facility that are due in August.

Market sources said the company should easily meet obligations for the next year.

'Lowball' bid for Life Sciences

Life Sciences' board said it has established a special committee to consider Baker's proposal and other alternatives.

Baker said in a letter sent to Life Sciences that he has started looking for financing sources to fund the deal, which is valued at about $95.10 million based on the number of outstanding shares.

"This was a lowball offer," Hamed Khorsand, an analyst with BWS Financial Inc., told Prospect News. "I don't think it's a true value to the stock. Even now the stock is trading at $6.00."

Khorsand has a $20.00 price target on the stock. Shares of Life Sciences have traded from $4.12 to $39.30 over the past year.

Although the offer is low, Khorsand said that the "only way the board will reject it will be if a superior bid surfaces, and I don't think that's likely at this point."

The deal has several conditions, including that Baker receives financing commitments and board approval.

Life Sciences provides research services for the pharmaceutical, agrochemical and biotechnology industries.

Mentioned in this article:

Blockbuster Inc. NYSE: BBI

CenturyTel, Inc. NYSE: CTL

Embarq Corp. NYSE: EQ

Life Sciences Research, Inc. NYSE Arca: LSR

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