Boston, MA 06/17/2014 (wallstreetpr) – Provider of integrated communications services, Level 3 Communications, Inc. (NYSE:LVLT) announced that it has reached a definitive deal with TW telecom (NASDAQ:TWTC) to buy the company through cash and stock transaction. The deal is approximately valued at $40.86 a share of TW Telecom. The transaction would allow Level 3 Communications to extend its fiber network in the U.S.
Acquisition Deal
The terms of the deal allow TW Telecom Inc (NASDAQ:TWTC) shareholders to receive 0.7 shares of Level 3 and a cash of $10 a share for every share held by them. This meant that the total deal is worth over $5.6 billion. Aside from this, Level 3 will assume net debts of about $1.6 billion taking the total to about $7.3 billion. Level 3 has got a commitment of $3 billion financing as part of the deal.
After the merger, TW Telecom shareholders will own about 29% of the combined entity or 27% on a fully diluted basis, which includes the shares connected with Level 3 Communications, Inc. (NYSE:LVLT)’ 7% convertible senior notes that are due in 2015. Separately, both the companies have struck a voting deal with STT Crossing Ltd., a Singapore Technologies Telemedia Pte Ltd.’s subsidiary that owns about 23% stake in Level 3 Communications.
Benefits of Deal
The companies disclosed that the transaction hardens Level 3’s position as a leading provider of global communications to the government, enterprise, and carrier market, through the combination of TW Telecom Inc (NASDAQ:TWTC)’s wide-ranging local assets and operations in North America supported by Level 3’s global capabilities and assets.
Level 3 expects to gain market share through this acquisition. The merged company will be highly complementary to each other’s strengths and create more customers service-oriented to meet increasing communications needs of both nationally and internationally. The transaction is predicted to be completed in the fourth quarter of the current year.
The merged companies will offer $240 million of synergies annually and $200 million savings from adjusted EBITA apart from $40 million savings of capital costs.
