Level 3 Communications agreed to acquire Global Crossing in April 2011 in a stock-for-stock deal announced at approximately $3.0 billion, including about $1.1 billion of Global Crossing net debt. Global Crossing shareholders were to receive 16 Level 3 shares for each share they held; the acquisition closed on October 4, 2011.
What did the $3 billion figure include?
The $3.0 billion figure was the headline value in the companies’ April 11, 2011 announcement. Using Level 3’s closing share price on April 8, the companies valued each Global Crossing share at $23.04. The stated transaction value included roughly $1.1 billion of Global Crossing net debt; it was not a cash payment of $3 billion to Global Crossing shareholders.
A later accounting figure is higher, but it measures the transaction differently:
| Figure | What it represents | Measurement basis |
|---|---|---|
| Approximately $3.0 billion | Headline transaction value in the April 11, 2011 announcement | Based on Level 3’s April 8 closing share price; includes about $1.1 billion of Global Crossing net debt. Source: Level 3 and Global Crossing, 2011. |
| Approximately $3.4 billion | Aggregate acquisition consideration reported later by Level 3 | Includes assumed debt and reflects the post-close share price, shares issued after the reverse-split adjustment, and approximately $1.36 billion of Global Crossing debt refinanced. Source: Level 3’s 2012 Form 10-K, reported in 2013. |
These amounts are not competing prices for a cash purchase. The first was an announcement-time valuation; the later figure was an accounting measure using post-close information and a different treatment of debt.
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What did Global Crossing shareholders receive?
The agreement provided for each Global Crossing common or preferred share to be exchanged for 16 Level 3 common shares, subject to the agreement’s conditions. The deal was described as a tax-free, stock-for-stock Bermuda amalgamation, rather than a conventional cash acquisition.
Level 3 carried out the transaction through Apollo Amalgamation Sub, Ltd., its wholly owned Bermuda subsidiary. At closing, Level 3 issued approximately 1.3 billion shares before a later reverse split. The closing announcement also said both companies were represented on the combined company’s board.
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When was the acquisition announced and completed?
The companies agreed to the transaction on April 10, 2011, and announced it the following day. Legal completion came on October 4, 2011. After closing, Global Crossing continued as a Level 3 subsidiary.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why did the companies pursue the deal?
The stated strategic case was to combine the companies’ networks and expand Level 3’s global reach. They said the combined provider would own network infrastructure in more than 50 countries and have connections to more than 70 countries, serving enterprise, government, wholesale, content, and web-based customers. The FCC described the proposed expansion as covering globally delivered transport, IP-based, data, content-delivery, data-center, colocation, and voice services.
The companies also published financial projections for the combined business. These were management’s pro forma estimates for 2010, not audited results for the combined company or proof of later performance:
- Pro forma revenue: $6.26 billion.
- Adjusted EBITDA before expected synergies: $1.27 billion.
- Adjusted EBITDA after expected synergies: $1.57 billion.
The $1.57 billion figure incorporated expected synergies. It should not be read as a verified post-acquisition result: the announcement figures are projections, and the cited transaction records do not establish whether the synergy or accretion targets were ultimately achieved.
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