Shares of Global Crossing Ltd. (NASDAQ: GLBC) touched a new 2-year high of $26.50 on Monday. Level 3 Communications, Inc. (NASDAQ: LVLT) agreed to buy Global Crossing in a tax-free, stock-for-stock transaction of about $3 billion.
The consideration includes the assumption of about $1.1 billion of Global Crossing net debt as of December 31, 2010. The transaction is expected to close before the end of this year.
The Hamilton, Bermuda-based Global Crossing said its shareholders will receive 16 shares of Level 3 common stock for each share of Global Crossing common stock or preferred stock that is owned at closing. Based on Level 3's closing stock price on April 8, the transaction is valued at $23.04 per Global Crossing common or preferred share.
The combined company will operate a global services platform, supported by fiber optic networks on three continents, connected by undersea facilities. The combined network will serve enterprise, government, wholesale, content, and web-based customers in over 50 countries and connections to more than 70 countries.
Global Crossing's majority shareholder Singapore Technologies Telemedia (ST Telemedia) has agreed to vote its shares in favor of the transaction. ST Telemedia will also designate members to Level 3's board in proportion to its stock ownership. Level 3 will begin the Global Crossing integration planning immediately.
The combined service capabilities, extensive network assets and talented employees of the two companies will create a stronger global communications competitor with compelling offerings in the marketplace, said John Legere, Chief Executive Officer of Global Crossing.
Standard & Poor's Ratings Services said it placed its ratings on Level 3 Communications on CreditWatch with positive implications after the acquisition announcement. Meanwhile, all ratings on Global Crossing, including the 'B' corporate credit rating on the parent entity and the 'B-' corporate credit rating on its subsidiary Global Crossing (U.K.) Telecommunications Ltd., are unchanged.
Global Crossing stock gapped open sharply higher April 11 at $26.39 compared to previous day's close of $14.80. The stock touched a new 2-year high of $26.50 on Monday.
The stock closed Monday's regular trading up 68.72 percent at $24.97 on the NASDAQ Stock Market with a record volume of 17.11 million shares. In the after-hours trading, the stock further rose 3.08 percent to $25.74. The stock traded between $10.09 and $26.50 during the past 52 weeks.