Level 3 to acquire Global Crossing in stock deal
- — 11 April, 2011 23:48
Telecom infrastructure provider Level 3 Communications will acquire Global Crossing, which provides Internet Protocol-based networks and Ethernet services and runs data centers, in an all-stock deal.
Level 3 will pay about US$3 billion for Global Crossing, but will also assume about $1.1 billion of Global Crossing's debt, the companies said in a press release. The combined telecom/Internet company will own network facilities in more than 50 countries, and will have combined annual revenues of more than $6 billion.
The acquisition will create an "unparalleled" global communications company, said Jim Crowe, Level 3's CEO. The combined company will have access to fast-growing international markets, and will have a "balanced mix" of telecom and broadband services, he said during a press briefing.
The benefits of the deal are "clear and powerful," he added. The company's IP networks will deliver services to 70 countries and will be able to achieve cost-savings of about $300 million per year, company officials said.
The combined company will offer "extensive" services focused on large customers, including transport, IP and data solutions, content delivery, data center, colocation and voice services, officials said. Global Crossing will bring several additions to Level 3's service offerings, including managed services, collaboration services and inter-continental virtual private networking capability, the companies said.
Level 3's services are largely focused on the U.S. market, while Global Crossing has targeted Europe, Japan and other markets.
"This kind of a combination has been talked about for years," said John Legere, CEO at Global Crossing. "We looked at bringing the company together several times over several years."
The deal will create an "extremely well positioned" company, Legere added. The acquisition will give the company greater scale and resources and a broader portfolio of services, he said.
"This is clearly the right combination at the right time," Legere said.
The companies expect the deal to close by the end of the year. The acquisition is subject to regulatory approval, including possible reviews by the U.S. Department of Justice and the U.S. Federal Communications Commission.
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is email@example.com.