Level 3 to acquire Global Crossing for $2 billion

AP News
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Posted: Apr 11, 2011 12:25 PM
Level 3 to acquire Global Crossing for $2 billion

Level 3 Communications Inc. said Monday that it is buying Global Crossing Ltd. for $2 billion, joining two major long-distance telecommunications networks that carry massive amounts of Internet and other data traffic in the U.S. and internationally.

Both Level 3 and Global Crossing operate vast, long-haul, fiber-optic networks used by other telecom carriers, corporations and government agencies. The combined company's reach would extend to 70 countries on three continents.

Level 3 Chief Executive Jim Crowe said the deal will help the companies keep up with ballooning growth in video, social networking and other bandwidth-hungry traffic traveling over networks around the globe.

Global Crossing shareholders would receive 16 Level 3 common shares in exchange for each share of Global Crossing common or preferred stock.

Based on Level 3's Friday close at $1.44 per share, the transaction values Global Crossing at $23.04 per share. Global Crossing's shares jumped $8.95, or 60.5 percent, at $23.75 Monday.

Level 3 shares rose 15 cents, or 10 percent, to $1.59.

The transaction is expected to close before the end of the year, pending regulatory and shareholder approval. Level 3 would assume $1.1 billion of Global Crossing's debt.

Level 3 is based in Broomfield, Colo. Global Crossing is based in Bermuda, but its largest shareholder is Singapore Technologies Telemedia, which has approved the deal.

ST Telemedia bought Global Crossing out of bankruptcy protection in 2003. It was one of many victims of overinvestment in fiber-optic networks during the Internet boom of the late 1990s.

In a separate announcement, Level 3 said it has adopted a stockholder rights plan to deter trading that would result in an ownership change because it wants to protect its ability to reduce its federal tax bills by deducting past losses.