Level 3 Closes Global Crossing Deal, Touts End-to-End Network Advantage
Level 3 Communications (NAS: LVLT) today said it had finalized its deal to acquire Global Crossings.
Level 3 now will operate a services platform for medium to large enterprise, wholesale, content and government customers, anchored by its fiber networks on three continents in more than 45 countries as well as substantial undersea facilities.
During a conference call this morning, Jeff Storey, president and COO of Level 3, said the deal was an important one for the industry as the two companies offer a unique global infrastructure.
"Our platform is designed and optimized for IP and CDN, it's purpose-built to support the type of needs our customers have going forward," he said. "Because of out metro facilities, we have the ability to go from local to global to local and deliver end-to-end services on net for our customers."
Storey pointed out that Level 3 had a strong presence in North America and in Europe, while Global Crossing was equally deep in Latin America and in the U.K.
Combined, they offer customers a "one-stop shop" for customers. "By eliminating off-net suppliers, we create enormous advantages for our customers," he said.
Level 3 said the transaction was structured as a tax-free, stock-for-stock exchange and said it would operate the merged businesses under the Level 3 Communications name. Beginning Oct. 20, it will transfer the listing of its common stock to the New York Stock Exchange and trade under its current ticker symbol "LVLT."
The combined business had pro forma 2010 revenues of $6.2 billion and pro forma 2010 Adjusted EBITDA of $1.3 billion before synergies and $1.6 billion after expected synergies. Total synergies are expected to be approximately $300 million of run-rate EBITDA, of which the company expects to realize the substantial majority within 18 months. As part of the closing of the transaction, Level 3 is redeeming and discharging approximately $1.35 billion of Global Crossing's outstanding consolidated debt.
"The company has an improved balance sheet and credit profile immediately at closing, with further improvement as we achieve the expected synergy benefits," said Sunit Patel, executive vice president and chief financial officer of Level 3.
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