Fibre-based infrastructure provider Level 3 Communications announced on 11 April that it had agreed to acquire the IP and data centre provider Global Crossing for approximately US$3bn including US$1.1bn in net debt.
Global Crossing shareholders will…
Fibre-based infrastructure provider Level 3 Communications announced on 11 April that it had agreed to acquire the IP and data centre provider Global Crossing for approximately US$3bn including US$1.1bn in net debt.
Global Crossing shareholders will receive 16 shares of Level 3 common stock for each Global Crossing share they hold.
The transaction has been valued at US$23.04 per Global Crossing share.
Level 3 stated on 11 April that it had already received US$1.75bn of committed financing in connection with the acquisition.
Level 3’s advisers for the deal were BoA Merrill Lynch, Citigroup and Morgan Stanley, while Rothschild also provided a fairness opinion.
Wilkie Farr & Gallagher was Level 3’s legal adviser.
Global Crossing was advised by Goldman Sachs. Its legal adviser was Latham & Watkins.
Level 3’s CEO, Jim Crowe, said the company welcomed Singapore Technologies Telemedia, the majority shareholder in Global Crossing, as a major investor.
According to Global Crossing’s most recent annual report, STT Crossing (a subsidiary of Singapore Technologies Telemedia) was its 60.2% owner.
ST Telemedia was advised by Credit Suisse.
In its statement, Level 3 said that the transaction would create a company with pro forma 2010 combined revenues of US$6.26bn, as well as combined 2010 adjusted EBITDA of US$1.27bn before expected synergies – and US$1.57bn afterwards.
Jim Crowe described it as a “transformational combination” that would deliver value for customers, investors and employees.
Level 3 said that the deal would also improve its credit profile and balance sheet, as well as expanding its global footprint and service portfolio.
The transaction is still subject to regulatory approval in the US and other countries. Level 3 said it expects the deal to close by the end of the year.
Financing In an SEC filing, Level 3 revealed that BoA Merrill Lynch and Citigroup had agreed to provide a US$1.1bn senior unsecured bridge facility for the deal.
This was on the condition that Level 3 itself or its subsidiary, Level 3 Financing, did not themselves issue senior notes to finance the deal.
On 6 May, Level 3 said that the bridge loan had not yet been used.
The filing also noted that the two banks would provide a US$650m senior secured term loan facility.
Level 3 said it expected this financing, as well as its cash balances, to cover both the cost of the acquisition and the refinancing of Global Crossing’s debt.
