Level 3 Communications agreed to acquire tw telecom in a deal that will combine its global fiber network and international data centers with tw telecom’s extensive metro footprint in major U.S. markets. The stock-and-cash transaction is valued at $40.86 per TWTC share, or $5.7 billion in aggregate, based on market close as of June 13, 2014. tw telecom stockholders will receive $10 cash and 0.7 shares of Level 3 common stock for each share of tw telecom common stock that is owned at closing.
“tw telecom’s business model is directly aligned with Level 3’s initiatives for growth, which include building managed solutions to meet customer needs through an advanced IP/optical network. The benefits created by this transaction deliver substantial value to both companies’ stockholders, as it accelerates our objective of driving profitable growth and strengthening Free Cash Flow per share growth over the long term,” said Jeff Storey, president and CEO of Level 3.
The companies expect to achieve $240 million in total run-rate synergies, including $40 million of expected CAPEX savings. The customer mix of the combined company will be about 70% enterprise customers and 30% wholesale customers.
Level 3 has already lined up $3 billion of committed financing for the acquisition.
Some highlights:
- Level 3 is based in Broomfield, Colorado and has 10,200 employees.
- Active in 60 countries and 170 markets
- Intercity fiber route miles: 110,000
- Metro fiber route miles: 36,000
- Subsea fiber route miles: 33,000
- tw telecom is based in Littleton, Colorado and has 3,407 employees.
- U.S. markets served: 36
- Intercity fiber route miles: 8,700
- Metro fiber route miles: 24,000
- Level 3’s prior acquisitions include WilTel (2005), Progress Telecom (2006), ICG(2006), Telcove (2006), Looking Glass Networks (2006), Broadwing (2007), SAVVIS’ content delivery network (2007), Servecast (2007), and Global Crossing (2011).
- Time Warner Communications was founded in 1993 as a joint venture between US West and Time Warner Communications. The company completed an IPO in 1999. It acquired Xspedius in 2006.
