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Level 3 Communications, a leading communication services company, has confirmed that it is to acquire IP service provider Global Crossing, in a deal valued at approximately $3 billion. Level 3 was once referred to as "the best funded start-up in history", and has continually invested in infrastructure to become a world-class communications provider. The company was established to address the view that cost-effective, scalable and reliable networks were the future for the telecommunications business.
Using the world's first integrated global IP-based network, Global Crossing offers data centre and video services and solutions, in addition to its core offering of converged global IP and Ethernet activities. The company services clients in the corporate and government sectors as well as its 700+ ISP, mobile operator and carrier clients.
The combined company revenues for 2010 equate to circa $6.26 billion, and the management teams from both companies have clearly stated their commitment to the creation and further development of a high performing business. The acquisition offers significant opportunities for both parties in terms of synergy, an enhanced financial position, an increased service portfolio and expanded enterprise service skills. Furthermore, it will allow for expansion opportunities in key global markets, creating an organisation uniquely positioned to address the requirements of customers on a local, national and international basis. The new company will benefit from combining the existing fibre-optic infrastructure which spans three continents.
Level 3 CEO, Jim Crowe, commented: "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."
CEO of Global Crossing, John Legere, added: "This transaction will provide Global Crossing shareholders with an attractive premium and significant participation in the upside potential of a leading communications company with industry-leading scale and capabilities. 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. Each of our companies has a reputation for being nimble and flexible in meeting customers' communications needs, and we expect that to continue - with the added benefit of offering customers significantly greater reach, products and services."
Author: Mike King, Analyst
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