Global Crossing Ltd. (Nasdaq: GBLX) Ltd., a long-distance phone company, said on Tuesday it was buying communications provider IXnet Inc. (Nasdaq: EXNT) and its parent company IPC Communications Inc. (AMEX: IPI) in a stock deal valued at $3.8 billion.
Global Crossing shares were up 1 1/8 to 53 1/2 on the news. Merrill Lynch also upgraded the stock from near-term accumulate to near-term buy Tuesday.
Under the terms of the deal, 1.184 Global Crossing shares would be swapped for each IXnet share not owned by IPC Communications. Global Crossing will exchange 5.417 of its shares for each IPC share.
IPC Communications, which provides desktop trading systems to financial companies, owns about 73 percent of IXnet's fully diluted shares.
IXnet shares were up 7 11/16 to 60 3/16, or 15 percent, and IPC Communications shares were unchanged at 140. Global Crossing acquired IXnet for its single "pipe" IP connectivity to more than 600 financial institutions for global trading and communications. IXnet hosts and distributes market data, news, streaming video, research and analytics for the financial community, and has points of presence in 37 countries.
Under the agreement, IXnet will use Global Crossing Network instead of leased lines to provide global bandwidth. The deal expands Global Crossing's customer relationships in the financial community, adding clients such as Citigroup, Chase, Goldman Sachs, Merrill Lynch, Morgan Stanley, Bear Stearns, Deutsche Bank, ABN AMRO, NatWest, HSBC, and Nomura.
"We will now move to the next level beyond providing building-to-building connectivity in major cities -- providing desktop-to-desktop connectivity for multinational corporations worldwide," said Global Crossing CEO Bob Annunziata in a press release. Global Crossing also said IXnet will give it increased presence in Asia, where it has current partnerships with Microsoft, Softbank and Hutchison Whampoa, as well as in the financial markets of Europe and the Americas.
Last Friday, Global Crossing company topped estimates for its fourth quarter earnings, but reported a loss, reversing last year's profit as it continued to grow its global internet and long distance telecommunications network over undersea digital fiber optic cable systems.