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Level 3 to Buy Broadwing for $1.4B
Oct 2006
BROOMFIELD, Colo., Oct. 18, 2006 -- Level 3 Communications will acquire Broadwing Corp. in a cash and stock deal worth $1.4 billion, the companies announced yesterday.

Under the agreement, Level 3 will pay $8.18 in cash, plus 1.3411 shares of Level 3 common stock, for each share of Broadwing common stock outstanding at closing, for a total of approximately $744 million in cash and 122 million stock shares, Level 3 said. Based on Monday’s $5.32 closing price of Level 3’s common stock, each share of Broadwing stock would receive the equivalent of $15.31 per share. The actual value of the consideration Broadwing stockholders receive at closing will depend on Level 3’s share price at that time.

Broadwing, based in Austin, Texas, is a provider of optical network communications services and has a 19,000-mile intercity fiber network. Broadwing's revenue is split evenly between the wholesale market and business customers.

Level 3 is one of the largest providers of wholesale dial-up service to ISPs in North America and, through its cable and DSL partners, provides Internet connectivity for millions of broadband subscribers. It has a 23,000-mile broadband fiber optic network. Since December, Level 3 has acquired WilTel, Progress Telecom, ICG Communications, TelCove and Looking Glass Networks.

"We are confident in our ability to successfully integrate Broadwing," said Kevin O'Hara, president and chief operating officer of Level 3. "We have completed the majority of integration efforts from our WilTel acquisition under budget and ahead of schedule. The integration activities for our more recent acquisitions are also on plan."

Level 3 said it expects the cost of integrating Broadwing into the company to be between $110 million and $130 million, and to take until sometime in 2008.

Closing is subject to customary conditions, including certain state and federal regulatory approvals, and is also subject to the approval of Broadwing's stockholders. The deal is expected to close in the first quarter of 2007.

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