Savvis-CenturyLink merger ‘unfair and undervalued,’ lawsuit says

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Updated to describe Mimi Acquisition’s relationship with CenturyLink.

A federal lawsuit seeks to stop a $3.2 billion merger between St. Louis-based IT infrastructure provider Savvis Inc. and telecommunications company CenturyLink Inc. — or at least get a better price for shareholders.

The merger was announced April 26. The $3.2 billion purchase price includes CenturyLink’s assumption of $700 million in debt. Savvis stockholders would receive $30 per share in cash and $10 in shares of CenturyLink common stock.

If the CenturyLink stock price averages $34.42 or less in the 30 days before closing, instead of $10 in CenturyLink shares, Savvis stockholders will receive 0.2905 of a CenturyLink share. A stockholder vote on the merger is scheduled for July 13, according to a filing with the U.S. Securities and Exchange Commission.

Plaintiff Thomas Keener, represented by the New York City law firm of Faruqi & Faruqi, says the proposed merger is “unfair and undervalued,” particularly in light of Savvis’ expectations of future growth.

The lawsuit, filed Monday in the U.S. District Court in St. Louis, alleges violations of the Securities and Exchange Act and also includes class claims of breach of fiduciary duties.

The suit names as defendants Savvis and its eight directors, CenturyLink and Mimi Acquisition Co., a wholly owned subsidiary of CenturyLink formed to bring about the merger.

The plaintiff is asking the federal court to stop the merger unless and until Savvis finds a way to get the best possible terms for shareholders.

Spokesmen for CenturyLink and Savvis said the companies do not comment on pending litigation.

The case is Keener v. Ousley et al., 4:11-cv-1062.