In the quest for greater corporate consolidation, Level 3 looks like it is going to be acquiring TW Telecom for $5.7 billion. Level 3 is a nationwide telecommunications company that specializes in fiber-optic cables.
The multi-billion dollar deal breaks down to approximately $40.90 a share, or a 12% increase in stock value from where it closed on Friday. The deal specifies that TW Telecom will receive $10 in cash per share. Level 3 will also be inheriting approximately $1.6 billion in debt.
Level 3 is considered to be one of the major “backbones” of the back-end Internet industry. Their cables are utilized by companies such as Google and Netflix. By acquiring TW Telecom, Level 3 will be able to offer greater internet access and online-based voiced calling to businesses. Level 3 expects that their new purchase will save the company $240 million in operating costs annually.
According to the New York Times, Level 3’s Chief Executive Jeff Storey said “The transaction further solidifies Level 3’s position as a premier global communications provider to the enterprise, government and carrier market, combining TW Telecom’s extensive local operations and assets in North America with Level 3’s global assets and capabilities.”
The deal is expected to be finalized by the of this year. Level 3’s value is to be evaluated at approximately $25 billion when all is said and done. At this point the merger must wait for a vote from the stockholders before it can proceed.
After the deal is finished, TW Telecom stockholders will still have about 29% of the newly combined company’s outstanding shares. In addition TW Telecom customers should expect improved networking in regards to local-to-global operations. Level 3 customers should see an improvement in their on-net experiences while doing business in North America. It is an ideal scenario where everybody wins.
Photo: AFP
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