LEVEL 3 Communications has agreed to acquire Global Crossing in an all-paper deal for $1.9 billion that will significantly expand Level 3’s reach and customer base.
Level 3 provides the network backbone for online video streaming services such as Netflix in the US, as well as a wide range of long-haul internet-based communications services for business customers and telecoms companies.
The deal, just weeks after ATT announced its $39 billion proposed purchase of Deutsche Telekom’s T-Mobile USA mobile unit, is a further sign of consolidation in the telecoms industry, which analysts said should lead to significant cost savings for the combined company.
Level 3’s offer values Global Crossing at $23.04 a share.
This is a premium of 56 per cent to the company’s closing price on Friday.
Global Crossing’s largest shareholder, with a stake of about 60 per cent, is Singapore Technologies Telemedia (STT). In association with the Employee Share Ownership Trust (Esot), STT took control of Eircom in a €140 million deal in late 2009.
STT is currently assessing the possibility of injecting capital into debt-laden Eircom as part of an “equity cure” which would buy the telco time with its lenders.
