Level 3 Buys WilTel for $680M in Cash, Stock
BROOMFIELD, Colo., Oct. 31 -- IP fiber optic network provider Level 3 Communications Inc. today announced that it has signed a definitive agreement with Leucadia National Corp. to acquire its WilTel Communications Group LLC for approximately $680 million -- 115 million shares of common stock currently valued at $310 million and $370 million cash. The closing is expect to occur in the first quarter of 2006, pending regulatory approval.
WilTel delivers voice, data, video and IP services over a next-generation fiber optic network. Under the agreement, Level 3 will not acquire WilTel's Tulsa headquarters, its $60 million mortgage or WilTel's $358 million credit facility. It does include all of WilTel's communications business, including a multiyear, $675 million contract with its largest customer, SBC, and WilTel's Vyvx video transmission business. As part of the transaction, Leucadia will retain the right to receive a $236 million termination payment from SBC, which is expected to phase out its WilTel contract due to SBC's pending merger with AT&T, moving the services WilTel provides to the combined SBC/AT&T network.
Level 3 President and COO Kevin O'Hara said that the combined company will reach 50 new markets and include 3000 new route miles compared to Level 3's pre-acquisition facilities.
Including the SBC contract, Level 3 says it expects WilTel to contribute $1.5 to $1.6 billion in revenue in 2006. With the expected migration of SBC traffic to the merged SBC and AT&T facilities, this amount is expected to decline to approximately $600 million in 2008. Level 3 says it expects WilTel to contribute approximately $50-90 million in cash flow in 2006, including integration costs, and approximately $125-150 million on an annual basis thereafter.
Level 3 officials say they expect the integration of Level 3 and WilTel's networks will take 15 to 18 months, and may involve the elimination of some jobs.
For more information, visit: www.level3.com
LATEST NEWS
- CLEO Heads to the East Coast
Apr 29, 2024
- Laser-Based Gas Analyzer Developed to Detect Air Pollution
Apr 29, 2024
- Qubits Could be Stored in Flash-Like Memory
Apr 29, 2024
- Exail Signs LLNL Contract, Partners with Eelume
Apr 26, 2024
- Menlo Moves U.S. HQ: Week in Brief: 4/26/2024
Apr 26, 2024
- Optofluidics Platform Keys Label-, Amplification-Free Rapid Diagnostic Tool
Apr 25, 2024
- DUV Lasers Made with Nonlinear Crystals Enhance Lithography Performance
Apr 25, 2024
- Teledyne e2v, Airy3D Collaborate on 3D Vision Solutions
Apr 24, 2024