Level 3 To Acquire Global Crossing For $3 Billion In Stock

Level 3 Communications has acquired IP solutions and networking provider Global Crossing. The transaction is valued at $23.04 per share, or approximately $3 billion, including the assumption of approximately $1.1 billion of net debt from Global Crossing. The deal was an all-stock transaction.

Global Crossing’s networking platform offers businesses VPN, leased lines, audio and video conferencing, long distance telephone, managed services, dialup, colocation and VoIP services. Global Crossing’s network is currently being used by 40 percent of Fortune 500 companies, as well as 700 carriers, mobile operators and ISPs.

Jim Crowe, chief executive officer of Level 3, said in a statement: “This is a transformational combination that we believe will deliver significant value to the investors, customers and employees of both Level 3 and Global Crossing…The complementary fit between the two companies’ networks, service portfolios and customers is compelling. 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.”

Global Crossing has had a tumultuous past. The company’s market cap was once $40 billion, which is well below the $3 billion acquisition price (or $1.9 billion minus debt). In 2002, the company filed for bankruptcy. Global Crossing’s founder Gary Winnick was sued for fraud by the company’s shareholders; Winnick and other executives eventually paid $325 million in a settlement.

The two companies will create a giant in the networking space. The combined company’s platform will be anchored by fiber optic networks on three continents, and will support clients in 50 countries (including Netflix). The revenue from both companies in 2010 was $6.26 billion.