Level 3 Communications acquires TW Telecom for US$7.3bn

16 Jun 2014

Data traffic player Level 3 Communications is to acquire TW Telecom Inc in a deal worth more than US$7.3bn. The move will enable Level 3 to deal directly with business customers as well as telcos.

The deal includes the assumption of US$1.6bn of debt.

Level 3 said it will pay US$10 cash and 0.7 shares of its own stock for each share of TW Telecom stock.

“We believe this is a financially compelling and very strategic acquisition for Level 3 that will enhance our ability to continue to gain market share,” chief executive Jeff Storey said.

Level 3 is expecting the deal to generate annualised synergies of about US$240m and expects it to boost free cash flow per share after the first year.

The company said it has secured committed financing of US$3bn and has entered a voting agreement with STT Crossing Ltd, a unit of Singapore Technologies Telemedia Pte Ltd, which owns about 23pc of Level 3’s stock.

Level 3 enables content companies like Sky, Netflix and Google transmit their content across the internet.

The acquisition of TW Telecom will give Level 3 access to large and medium-sized businesses and give it more network capacity in cities.

Data image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years