Grading the Level 3 Communications – Global Crossing Deal


Background:
Level 3 Communications (LVLT) entered into a definitive agreement under which Level 3 Communications will acquire Global Crossing (GLBC) in a tax-free, stock-for-stock transaction on April 11, 2011. Global Crossing shareholders will receive 16 shares of Level 3 common stock for each share of Global Crossing common stock or preferred stock that is owned at closing. The deal includes the assumption of approximately $1.1 billion of net debt as of Dec. 31, 2010.

GLBC’s closing price on Friday was $14.80 and LVLT closed at $1.70 the day following the announcement. This equates to $27.2 for the GLBC shareholder, an 83% premium. The companies expect the transaction to close before the end of 2011.

Good for the Level 3 shareholder?
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