This is not “new” news (from April, 2011) , but since many clients were not aware of this merger, I feel compelled to post it here:
Level 3 Communications, Inc. (NASDAQ: LVLT) said it agreed to acquire Global Crossing Limited (NASDAQ: GLBC) for about $1.9 billion stock deal to boost its service portfolio.
Including Global Crossing’s net debt of about $1.1 billion as of Dec. 31, 2010, the deal values the company at about $3 billion.
The deal will create a company with pro forma combined 2010 revenues of $6.26 billion and pro forma combined 2010 Adjusted EBITDA of $1.27 billion before synergies and $1.57 billion after expected synergies.
By combining the strengths of each company, the new entity will offer enterprise, government, wholesale, content, and web-based customers a comprehensive portfolio of end-to-end data, video and voice solutions.
“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,” said Jim Crowe, chief executive officer of Level 3. “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.”
Including the benefit of synergies and the cost of integration, Level 3 expects the transaction to be accretive to its Free Cash Flow per share in 2013.
Through integration of the combined businesses, the transaction is expected to create substantial annualized Adjusted EBITDA synergies of approximately $300 million and cost savings of about $40 million.
Level 3 expects to realize approximately two-thirds of the run rate Adjusted EBITDA synergies within 18 months of closing. The company estimates that the net present value of the potential synergies will be approximately $2.5 billion.
In addition, Level 3 expects to incur about $200 million to $225 million of integration costs associated with this transaction.
Also, the transaction is expected to improve Level 3’s credit profile as well as significantly strengthen the company’s balance sheet.
The combined business will offer an extensive portfolio of transport, IP and data solutions, content delivery, data center, colocation and voice services, delivered globally.
Global Crossing will bring important additions to Level 3’s service portfolio, including managed services, collaboration services and inter-continental virtual private networking capability. The combined service portfolio and distribution channels will allow Level 3 to better address the needs of enterprises, content providers, carriers and governments throughout North America, Latin America and Europe.
Global Crossing’s enterprise service portfolio and proven sales expertise together with the improved cost structure and performance achievable by combining the extensive international, intercity and metro networks will enable opportunities for improved growth by giving enterprises better options to meet their local, national and international communications needs.
Level 3, which got committed financing for $1.75 billion in connection with this acquisition, said ST Telemedia, which owns approximately 60 percent of Global Crossing’s stock, has agreed to vote its shares in favor of the deal.
The transaction is expected to close before the end of this year, subject to customary closing conditions and regulatory approvals.
Bermuda-based Global Crossing is an IP, Ethernet, data center and video solutions provider, offering a full range of data, voice, collaboration, broadcast and media services delivered with superior customer service.
It connects the North America and Europe, and links to Asia and Latin America through submarine fiber-cable networks. This fiber stream supports a wide range of services, including Internet access and other data services, for multinational corporations, government agencies, and other telecom service providers
Global Crossing provides services to enterprises (including approximately 40 percent of the Fortune 500); government departments and agencies; and 700 carriers, mobile operators and ISPs. It delivers converged IP services to more than 700 cities in more than 70 countries, and has 17 world-class data centers in major business centers around the globe.
In 2010, Global Crossing revenue grew to $2.61 billion from $2.54 billion in 2009.
