Level 3 to buy Global Crossing in stock deal

The acquisition by the network services company is valued at $3 billion, including the assumption of Global Crossing's $1.1 billion in debt.

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Don Reisinger
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Level 3 plans to acquire Global Crossing to form an expansive network services company.

Under the terms of the deal, announced today, Level 3 will give 16 shares of its own stock for every Global Crossing share. Based on Level 3's closing price on April 8 of $23.04, the company estimates the value of the deal at $3 billion. That figure also includes $1.1 billion of debt, which Level 3 will assume.

Level 3 provides fiber optic-based data, Internet, content delivery, and voice services for companies and government customers. Global Crossing is best known for offering IP-based services, including data, voice, and broadcast, to over 700 cities around the world.

Level 3 said in a statement that it plans to use Global Crossing's offerings to provide customers with "end-to-end data, video and voice solutions." The company's CEO, Jim Crowe, highlighted the combined firm's ability to offer even more services to clients around the globe.

"The complementary fit between the two companies' networks, service portfolios and customers is compelling," Crowe said in a statement. "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."

The deal will create a firm with an estimated $6 billion in revenue, according to Level 3. Its earnings before interest, taxes, depreciation, and amortization (EBITDA) will hit $1.57 billion after "expected synergies."

Level 3 also said today that information and communications company Singapore Technologies Telemedia (ST Telemedia) will now become a "significant investor" in its operation.

ST Telemedia, which owns 60 percent of Global Crossing's stock and operates in Asia, Europe, and the Americas, has already agreed to vote in favor of the acquisition. In addition to receiving a stake in Level 3, ST Telemedia will be able "to designate members to the Level 3 board of directors, proportionate to their stock ownership."

The Global Crossing acquisition still requires regulatory approval. If all goes well, the company expects to close the deal by the end of the year.