Level 3, Global Crossing agree to $3 billion deal

SAN FRANCISCO — Shares of telecom-networking companies Level 3 Communications Inc. and Global Crossing Ltd. surged Monday after Level 3 said it would acquire Global Crossing in a deal worth $3 billion.

The deal, announced before the market opened on Monday, values Global Crossing at $23.04 a share, or a 56 percent premium over the company’s closing stock price on Friday.

The companies are best known for operating fiber-optic networks and will be able to serve 70 countries after the deal closes.

Jim Crowe, chief executive of Level 3, said in a
statement that the deal was “a transformational combination” that would
create a stronger global network of optical services.

Under terms of the deal, Global Crossing shareholders will receive 16 shares of Level 3 stock for each share of Global Crossing’s stock. The companies expect the acquisition to close before the end of the year.

The deal also involves the participation of Singapore Technologies Telemedia, which owns a 60 percent stake in Global Crossing.
After the deal closes, ST Telemedia will get to nominate members to the
Level 3 board of directors relative to the size of their stock
ownership in the company.

The acquisition also brings together two companies
that had been high-fliers during the Internet bubble of more than a
decade ago. ST Telemedia bought its controlling stake in Global Crossing in 2003 after that company filed for Chapter 11 bankruptcy protection in 2002.

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