IP-based communications solutions provider Level 3 Communications and ISP TW Telecom have closed their merger to create a B2B operator with a total enterprise value of US$25bn.
The completion follows regulatory approval from the US communications…
IP-based communications solutions provider Level 3 Communications and ISP TW Telecom have closed their merger to create a B2B operator with a total enterprise value of US$25bn.
The completion follows regulatory approval from the US communications regulator the FCC at the end of last week and shareholders in both telcos voting overwhelmingly in favour of the transaction on Tuesday.
Level 3 agreed to buy TW in June for US$5.7bn in cash and stock, and to assume the target’s US$1.6bn debt pile.
In a statement, Level 3 CEO Jeff Storey said: “The combination of TW Telecom’s rich metro footprint with Level 3’s global network, positions the company to provide local-to-global business solutions and deliver a world-class customer experience.”
Following the closing, Level 3 has already moved to refinance TW’s bonds. It has announced plans to redeem TW’s 5.375% senior notes due 2022 and 6.375% senior notes due 2023 in two phases before the end of the year. In total, Level 3 will redeem US$832m worth of notes.
When the deal was announced, TW’s CEO Larissa Herda said on a conference call that the companies – both based on the outskirts of Denver, Colorado – had been considering the tie-up for a very long time.
On the call Storey added: “We believe this is a financially compelling and very strategic acquisition for Level 3 that will enhance our ability to continue to gain market share.
“The transaction further solidifies Level 3’s position as a premier global communications provider to the enterprise, government and carrier market, combining TW Telecom’s extensive local operations and assets in North America with Level 3’s global assets and capabilities.”
Level 3 owns networks and data centres in more than 60 countries as well as global subsea networks. It provides local, national and global communications services to enterprise, government and carrier customers.
TW offers managed services, including business ethernet, converged and IP VPN solutions for enterprises throughout the US and across the globe.
The combined business has more than 200,000 route miles of fibre around the world, 33,000 miles of which is under the sea. It services more than 50,000 customers across 60 countries around the world and connects 30,000 buildings across the US.
Citi and BofA Merrill Lynch acted as financial advisers to Level 3 and Rothschild provided a fairness opinion. Willkie Farr & Gallagher acted as legal counsel to Level 3.
Evercore provided financial advice and a fairness opinion to TW. Wachtell, Lipton, Rosen & Katz was legal counsel to TW.
