The US fibre-based infrastructure provider Level 3 Communications has announced today that it has entered into a definitive agreement to acquire the IP and data centre provider Global Crossing for approximately US$3bn.
Under the terms of the agreement,…
The US fibre-based infrastructure provider Level 3 Communications has announced today that it has entered into a definitive agreement to acquire the IP and data centre provider Global Crossing for approximately US$3bn.
Under the terms of the agreement, 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. The US$3bn total value includes the assumption of US$1.1bn of net debt.
Level 3 said in a statement 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 LLP 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 that his company was also looking forward to welcoming 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) held a 60.2% stake in Global Crossing as of 1 February 2011.
ST Telemedia was advised on the Level 3 acquisition 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 after these synergies had taken place.
Jim Crowe described it as a “transformational combination” that would deliver value for customers, investors and employees.
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.”
In addition to significant synergies, Level 3 said that the deal would also bring benefits by improving Level 3’s 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 where the companies operate. Level 3 said that it anticipated the deal closing by the end of the year.
