Level 3 Acquires Global Crossing11 Apr, 2011 By: Chris Tribbey
Broadband services provider Level 3 Communications will expand its network to three continents after acquiring rival Global Crossing Limited in a $1.9 billion all-stock transaction.
The combined company will control fiber optic networks, connected by undersea facilities, in North America, Latin America and Europe, with the ability to reach more than 70 countries.
Level 3 is a backend technology provider for Netflix’s streaming service. Recently the company tussled with Comcast Corp. concerning recurring fees imposed by the broadband company for transmitting movies and other content to consumers.
“This is a transformational combination that we believe will deliver significant value to the investors, customers and employees of both Level 3 and Global Crossing,” Level 3 CEO Jim Crowe said. “The complementary fit between the two companies’ networks, service portfolios and customers is compelling. By leveraging the respective strengths and extensive reach of both companies, we are creating a highly efficient and more extensive global platform that is well-positioned to meet the local and international needs of our customers.”
The terms of the deal call for Global Crossing shareholders to receive 16 shares of Level 3 common stock for each share of Global Crossing common stock or preferred stock, based on Level 3’s April 8 closing price of $23.04.
“This transaction will provide Global Crossing shareholders with an attractive premium and significant participation in the upside potential of a leading communications company with industry-leading scale and capabilities,” said Global Crossing CEO John Legere. “The combined service capabilities, extensive network assets and talented employees of the two companies will create a stronger global communications competitor with compelling offerings in the marketplace.”
The combined companies will be able to reduce annual capital expenditures by $40 million, according to a statement.