Easily one of the biggest developments in the merger and acquisition space this month, news recently emerged about CenturyLink, who agreed to purchase Level 3 Communications. The deal represented both cash and stock for a combined total of nearly $34 billion all told, and leaves CenturyLink as one of the biggest names around in handling Internet traffic.

In doing so, CenturyLink effectively valued Level 3 at $66.50 a share, reports noted. That by itself wouldn't mean so much, but it reportedly represents a premium of about 42 percent over last week's trading. That makes it pretty clear; CenturyLink wanted Level 3, and wanted it pretty badly. So why was CenturyLink willing to pay so much for Level 3? Based on the current market profile, reports suggest that CenturyLink wanted to be in a better position to take on other Internet heavyweights like AT&T and Verizon. Plus, CenturyLink now has access to some new high-end network security products, which should be helpful given the popularity of network protection mechanisms in an environment where data breaches are an ongoing fact of life.

Leadership is set to remain static, as CenturyLink's CEO Glen Post will remain CEO, and Level 3's CFO Sunit Patel will stay CFO. Reports suggest that regulatory hurdles in the way of this deal should stay comparatively quiet, and let the deal go through with minimum of fuss.

It certainly didn't hurt that CenturyLink now has access to $10 billion in tax credits that Level 3 had on hand, though reports note that CenturyLink only plans to use less than $2 billion of these annually as a credit against taxes. Interestingly, though the deal drove shares of Level 3 up to $56.58, still below the offer value, it also drove shares of CenturyLink down to its biggest loss in over three and a half years.

Thus the market seems less than happy about this arrangement, though given CenturyLink's motivations, it's odd that it would respond this way. Perhaps investors think CenturyLink overpaid; that's not out of line given the sheer amount of cash CenturyLink shelled out. Considering that it got an instant 30 percent discount, roughly, thanks to those tax credits should have ameliorated any hesitation. Maybe investors think that the acquisition of Level 3 won't be enough to drive a rolling battle with the likes of AT&T and Verizon, and thus, CenturyLink basically spent a quarter to make a dime. Also possible, but given how much demand there is for bandwidth these days it would seem any move on this front would be well-received.

Still, it's looking like a good move for CenturyLink, even if the market doesn't agree just yet. Only time will tell how well it all goes over, but CenturyLink has a much bigger presence now than it did before.